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Template-Type: ReDIF-Paper 1.0
Title: Identity, Parochial Institutions, and Occupational Choice: Linking the Past to the Present in the American Midwest
Classification-JEL: J24; J61; N11; R23
Author-Name: Kaivan Munshi
Author-Person: pmu269
Author-Name: Nicholas Wilson
Author-Person: pwi226
Note: CH DAE LS
Number: 13717
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13717
File-URL: http://www.nber.org/papers/w13717.pdf
File-Format: application/pdf
Abstract: This paper documents the presence of non-economic career motivations in the U.S. labor market, explores reasons why such motivations could arise, and provides an explanation for why they might have persisted across many generations. The analysis links ethnic (migrant) labor market networks in the American Midwest when it was first being settled, the local identity or attachment to place that emerged endogenously to maintain the integrity of these networks, and occupational choice today. While fractionalization may adversely affect the performance of secular institutions, ethnic competition in the labor market could at the same time have strengthened within-group loyalty and parochial institutions. These values and their complementary institutions, notably the church, could have mutually reinforced each other over many overlapping generations, long after the networks themselves had ceased to be salient. Counties with greater ethnic fractionalization in 1860 are indeed associated with steadily increasing participation in select religious denominations historically dominated by the migrants all the way through the twentieth century. Complementing this result, individuals born in high fractionalization counties are significantly less likely to select into geographically mobile professional occupations and, hence, to migrate out of their county of birth, despite the fact that these counties are indistinguishable from low fractionalization counties in terms of local public good provision and economic activity today.
Handle: RePEc:nbr:nberwo:13717
Template-Type: ReDIF-Paper 1.0
Title: Does Movie Violence Increase Violent Crime?
Classification-JEL: A12; C91; C93; J08
Author-Name: Gordon Dahl
Author-Person: pda455
Author-Name: Stefano DellaVigna
Author-Person: pde710
Note: CH LE LS PE
Number: 13718
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13718
File-URL: http://www.nber.org/papers/w13718.pdf
File-Format: application/pdf
Publication-Status: published as Gordon Dahl & Stefano DellaVigna, 2009. "Does Movie Violence Increase Violent Crime?," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 677-734, May.
Abstract: Laboratory experiments in psychology find that media violence increases aggression in the short run. We analyze whether media violence affects violent crime in the field. We exploit variation in the violence of blockbuster movies from 1995 to 2004, and study the effect on same-day assaults. We find that violent crime decreases on days with larger theater audiences for violent movies. The effect is partly due to voluntary incapacitation: between 6PM and 12AM, a one million increase in the audience for violent movies reduces violent crime by 1.1 to 1.3 percent. After exposure to the movie, between 12AM and 6AM, violent crime is reduced by an even larger percent. This finding is explained by the self-selection of violent individuals into violent movie attendance, leading to a substitution away from more volatile activities. In particular, movie attendance appears to reduce alcohol consumption. Like the laboratory experiments, we find indirect evidence that movie violence increases violent crime; however, this effect is dominated by the reduction in crime induced by a substitution away from more dangerous activities. Overall, our estimates suggest that in the short-run violent movies deter almost 1,000 assaults on an average weekend. While our design does not allow us to estimate long-run effects, we find no evidence of medium-run effects up to three weeks after initial exposure.
Handle: RePEc:nbr:nberwo:13718
Template-Type: ReDIF-Paper 1.0
Title: Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia
Classification-JEL: D73; H21; H24; H26; J3; O1; P2
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Jorge Martinez-Vazquez
Author-Person: pma25
Author-Name: Klara Sabirianova Peter
Note: LS PE
Number: 13719
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13719
File-URL: http://www.nber.org/papers/w13719.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Jorge Martinez-Vazquez & Klara Sabirianova Peter, 2009. "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 504-554, 06.
Abstract: Using micro-level data, we examine the effects of Russia's 2001 flat rate income tax reform on consumption, income, and tax evasion. We use the gap between household expenditures and reported earnings as a proxy for tax evasion with data from a household panel for 1998-2004. Utilizing difference-in-difference and regression-discontinuity-type approaches, we find that large and significant changes in tax evasion following the flat tax reform are associated with changes in voluntary compliance and cannot be explained by changes in tax enforcement policies. We also find the productivity response of taxpayers to the flat tax reform is small relative to the tax evasion response. Finally, we develop a feasible framework to assess the deadweight loss from personal income tax in the presence of tax evasion based on the consumption response to tax changes. We show that because of the strong tax evasion response the efficiency gain from the Russian flat tax reform is at least 30% smaller than the gain implied by conventional approaches.
Handle: RePEc:nbr:nberwo:13719
Template-Type: ReDIF-Paper 1.0
Title: Optimal Savings Distortions with Recursive Preferences
Classification-JEL: H0
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Iván Werning
Author-Person: pwe141
Note: EFG PE
Number: 13720
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13720
File-URL: http://www.nber.org/papers/w13720.pdf
File-Format: application/pdf
Publication-Status: published as Farhi, Emmanuel & Werning, Iván, 2008. "Optimal savings distortions with recursive preferences," Journal of Monetary Economics, Elsevier, vol. 55(1), pages 21-42, January.
Abstract: This paper derives an intertemporal optimality condition for economies with private information, focusing on a class of recursive preferences. By comparing it to the situation where agents can freely save in a risk-free asset market, we derive the optimal savings distortions necessary for constrained optimality. Our recursive preferences are homogeneous and satisfy a balanced growth condition, while allowing us to separate the role of risk aversion and intertemporal elasticity of substitution. We perform some quantitative exercises that disentangle the respective roles played by these two parameters play in opt8imal distortions and the implied welfare gains.
Handle: RePEc:nbr:nberwo:13720
Template-Type: ReDIF-Paper 1.0
Title: How Does Corporate Governance Risk at Home Affect Investment Choices Abroad?
Classification-JEL: F3; G1; G3
Author-Name: Woochan Kim
Author-Person: pki10
Author-Name: Taeyoon Sung
Author-Person: psu112
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: CF IFM
Number: 13721
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13721
File-URL: http://www.nber.org/papers/w13721.pdf
File-Format: application/pdf
Publication-Status: published as Woochan Kim, Taeyoon Sung, Shang-Jin Wei Does corporate governance risk at home affect investment choices abroad? ☆ Journal of International Economics, Volume 85, Issue 1, September 2011, Pages 25–41
Abstract: Disparity between control and ownership rights gives rise to the risk of tunneling by the controlling shareholder, and is prevalent in many emerging market economies and present in some developed countries. At the same time, international investors come from different countries whose home markets are characterized by varying degrees of control-ownership disparity. This paper studies whether this difference in investors' home countries affects their portfolio choice in an emerging market. It combines two unique data sets on ownership and control in business groups, and investor-stock level foreign investment in Korea. A key finding is that, investors from low-disparity countries disfavor high-disparity stocks in Korea, but investors from high-disparity countries are indifferent. Moreover, investors from low-disparity countries became averse to disparity only after the Asian financial crisis. These results suggest that the nature of corporate governance in international investors' home countries affects their portfolio choice abroad, and therefore that these investors should not be lumped together in the analyses of their portfolio choice.
Handle: RePEc:nbr:nberwo:13721
Template-Type: ReDIF-Paper 1.0
Title: Complementarity and the Measurement of Individual Risk Tradeoffs: Accounting for Quantity and Quality of Life Effects
Classification-JEL: I12; J17
Author-Name: Mary F. Evans
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE LS
Number: 13722
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13722
File-URL: http://www.nber.org/papers/w13722.pdf
File-Format: application/pdf
Publication-Status: published as Mary Evans & V. Kerry Smith, 2008. "Complementarity and the Measurement of Individual Risk Tradeoffs: Accounting for Quantity and Quality of Life Effects," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(3), pages 381-400, November.
Abstract: This paper considers the factors responsible for differences with age in estimates of the wage compensation an individual requires to accept increased occupational fatality risk. We derive a relationship between the value of a statistical life (VSL) and the degree of complementarity between consumption and labor supplied when health status serves as a potential source of variation in this relationship. Our empirical analysis finds that variations in an individual's health status or quality of life and anticipated longevity threats lead to significant differences in the estimated wage/risk tradeoffs. We describe how extensions to the specification of hedonic wage models, including measures for quality of life and anticipated longevity threats, help to explain the diversity in past studies examining how the estimated wage-risk tradeoff changes with age.
Handle: RePEc:nbr:nberwo:13722
Template-Type: ReDIF-Paper 1.0
Title: Liquidity, Institutional Quality and the Composition of International Equity Outflows
Classification-JEL: F2; F23; F3; G11
Author-Name: Itay Goldstein
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Hui Tong
Author-Person: pto159
Note: IFM
Number: 13723
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13723
File-URL: http://www.nber.org/papers/w13723.pdf
File-Format: application/pdf
Abstract: We examine the choice between Foreign Direct Investment and Foreign Portfolio Investment at the level of the source country. Based on a theoretical model, we predict that (1) source countries with higher probability of aggregate liquidity crises export relatively more FPI than FDI, and (2) this effect strengthens as the source country's capital market transparency worsens. To test these hypotheses, we apply a dynamic panel model and examine the variation of FPI relative to FDI for 140 source countries from 1985 to 2004. Our key variable is the probability of an aggregate liquidity crisis, estimated from a Probit model, as proxied by episodes of economy-wide sales of external assets. Consistent with our theory, we find that the probability of a liquidity crisis has a strong effect on the composition of foreign equity investment. Furthermore, greater capital market opacity in the source country strengthens the effect of the crisis probability.
Handle: RePEc:nbr:nberwo:13723
Template-Type: ReDIF-Paper 1.0
Title: Variable Rare Disasters: An Exactly Solved Framework for Ten Puzzles in Macro-Finance
Classification-JEL: E43; E44; G12
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: AP EFG
Number: 13724
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13724
File-URL: http://www.nber.org/papers/w13724.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gabaix, 2012. "Variable Rare Disasters: An Exactly Solved Framework for Ten Puzzles in Macro-Finance," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 645-700.
Abstract: This paper incorporates a time-varying intensity of disasters in the Rietz-Barro hypothesis that risk premia result from the possibility of rare, large disasters. During a disaster, an asset's fundamental value falls by a time-varying amount. This in turn generates time-varying risk premia and thus volatile asset prices and return predictability. Using the recent technique of linearity-generating processes (Gabaix 2007), the model is tractable, and all prices are exactly solved in closed form. In the "variable rare disasters" framework, the following empirical regularities can be understood qualitatively: (i) equity premium puzzle (ii) risk-free rate-puzzle (iii) excess volatility puzzle (iv) predictability of aggregate stock market returns with price-dividend ratios (v) value premium (vi) often greater explanatory power of characteristics than covariances for asset returns (vii) upward sloping nominal yield curve (viiii) a steep yield curve predicts high bond excess returns and a fall in long term rates (ix) corporate bond spread puzzle (x) high price of deep out-of-the-money puts. I also provide a calibration in which those puzzles can be understood quantitatively as well. The fear of disaster can be interpreted literally, or can be viewed as a tractable way to model time-varying risk-aversion or investor sentiment.
Handle: RePEc:nbr:nberwo:13724
Template-Type: ReDIF-Paper 1.0
Title: Religion, Terrorism and Public Goods: Testing the Club Model
Classification-JEL: D2; D31; H41; H56; H68; J0; J13; O17; O24; Z12
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: David D. Laitin
Note: LS PE PR
Number: 13725
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13725
File-URL: http://www.nber.org/papers/w13725.pdf
File-Format: application/pdf
Publication-Status: published as Berman, Eli & Laitin, David D., 2008. "Religion, terrorism and public goods: Testing the club model," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1942-1967, October.
Abstract: Can rational choice modeling explain why Hamas, Taliban, Hezbollah and other radical religious rebels are so lethal? The literature rejects theological explanations. We propose a club framework, which emphasizes the function of voluntary religious organizations as efficient providers of local public goods in the absence of government provision. The sacrifices religious clubs require are economically efficient (Iannaccone (1992)), making them well suited for solving the extreme principal-agent problems faced by terrorist and insurgent organizations. Thus religious clubs can be potent terrorists. That explanation is supported by data on terrorist lethality in the Middle East. The same approach explains why religious clubs often choose suicide attacks. Using three data sources spanning a half century, and comparing suicide attackers to civil war insurgents, we show that suicide attacks are chosen when targets are "hard," i.e., difficult to destroy. Data from Israel/Palestine confirm that prediction. To explain why radical religious clubs specialize in suicide attacks we model the choice of tactics by rebels attacking hard targets, considering the human costs and tactical benefits of suicide attacks. We ask what a suicide attacker would have to believe to be rational. We then embed that attacker and other operatives in a club model. The model has testable implications for tactic choice and damage achieved by clubs and other rebels, which are supported by data on terrorist attacks in the Middle East: Radical religious clubs are more lethal and choose suicide terrorism more often, when they provide benign local public goods. Our results suggest benign tactics to counter terrorism by religious radicals.
Handle: RePEc:nbr:nberwo:13725
Template-Type: ReDIF-Paper 1.0
Title: Footnotes Aren't Enough: The Impact of Pension Accounting on Stock Values
Classification-JEL: D8; G12; G2; G23; G32; J26; J48; M41; M48; M52
Author-Name: Julia Coronado
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Steven A. Sharpe
Author-Name: S. Blake Nesbitt
Note: AG AP LS
Number: 13726
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13726
File-URL: http://www.nber.org/papers/w13726.pdf
File-Format: application/pdf
Publication-Status: published as Coronado, Julia & Mitchell, Olivia S. & Sharpe, Steven A. & Blake Nesbitt, S., 2008. "Footnotes aren't enough: the impact of pension accounting on stock values," Journal of Pension Economics and Finance, Cambridge University Press, vol. 7(03), pages 257-276, November.
Abstract: Some research has suggested that companies with defined benefit (DB) pensions are sometimes significantly misvalued by the market. This is because the measures of pension cost and pension net liabilities embedded in financial statements, taken at face value, can provide very misleading picture of pension finances. The more pertinent information on pension finances is relegated to footnotes, but might not receive much attention from portfolio managers. But dramatic swings in the financial conditions of large DB plans around the turn of the decade focused widespread attention on pension accounting practices, and dissatisfaction with current accounting standards has recently prompted the Financial Accounting Standards Board (FASB) to take up a project revamp DB pension accounting. Arguably, the increased attention should have made investors wise to the informational problems, thereby eliminating systematic mispricing in recent years. We test this proposition and conclude that investors continued to misvalue DB pensions, inducing sizable valuation errors in the stock of many companies. Our findings suggest that FASB's current reform efforts could substantially aid the market's ability to value firms with DB pensions.
Handle: RePEc:nbr:nberwo:13726
Template-Type: ReDIF-Paper 1.0
Title: Gender Differences in Competition: Evidence from a Matrilineal and a Patriarchal Society
Classification-JEL: C9; C91; C93; J15; J16
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: Kenneth L. Leonard
Author-Person: ple2
Author-Name: John A. List
Author-Person: pli176
Note: LE LS PE
Number: 13727
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13727
File-URL: http://www.nber.org/papers/w13727.pdf
File-Format: application/pdf
Publication-Status: published as Uri Gneezy & Kenneth L. Leonard & John A. List, 2009. "Gender Differences in Competition: Evidence From a Matrilineal and a Patriarchal Society," Econometrica, Econometric Society, vol. 77(5), pages 1637-1664, 09.
Abstract: This study uses a controlled experiment to explore whether there are gender differences in selecting into competitive environments across two distinct societies: the Maasai in Tanzania and the Khasi in India. One unique aspect of these societies is that the Maasai represent a textbook example of a patriarchal society whereas the Khasi are matrilineal. Similar to the extant evidence drawn from experiments executed in Western cultures, Maasai men opt to compete at roughly twice the rate as Maasai women. Interestingly, this result is reversed amongst the Khasi, where women choose the competitive environment more often than Khasi men, and even choose to compete weakly more often than Maasai men. We view these results as potentially providing insights into the underpinnings of the factors hypothesized to be determinants of the observed gender differences in selecting into competitive environments.
Handle: RePEc:nbr:nberwo:13727
Template-Type: ReDIF-Paper 1.0
Title: Matching and Challenge Gifts to Charity:Evidence from Laboratory and Natural Field Experiments
Classification-JEL: C9; C93; H4
Author-Name: Daniel Rondeau
Author-Person: pro295
Author-Name: John A. List
Author-Person: pli176
Note: EEE PE
Number: 13728
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13728
File-URL: http://www.nber.org/papers/w13728.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Rondeau & John List, 2008. "Matching and challenge gifts to charity: evidence from laboratory and natural field experiments," Experimental Economics, Springer, vol. 11(3), pages 253-267, September.
Abstract: This study designs a natural field experiment linked to a controlled laboratory experiment to examine the effectiveness of matching gifts and challenge gifts, two popular strategies used to secure a portion of the $200 billion annually given to charities. We find evidence that challenge gifts positively influence contributions in the field, but matching gifts do not. Methodologically, we find important similarities and dissimilarities between behavior in the lab and the field. Overall, our results have clear implications for fundraisers and provide avenues for future empirical and theoretical work on charitable giving.
Handle: RePEc:nbr:nberwo:13728
Template-Type: ReDIF-Paper 1.0
Title: Designing Institutions to Deal with Terrorism in the United States
Classification-JEL: H1; H56
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: PE
Number: 13729
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13729
File-URL: http://www.nber.org/papers/w13729.pdf
File-Format: application/pdf
Publication-Status: published as Martin Feldstein, 2008. "Designing Institutions to Deal with Terrorism in the United States," American Economic Review, American Economic Association, vol. 98(2), pages 122-26, May.
Abstract: The explosion in the 21st century of terrorist activities by Islamic radicals in the United States, Europe and Asia requires reforming the institutions for domestic counterterrorism (CT) and new international relations among individual national CT organizations. This paper discusses the institutional reforms for CT in the United States, focusing particularly on the changes in the FBI. These changes are compared with the way that the British CT activities of the MI5 and MI6 have evolved in response to terrorism in Britain. The paper also discusses the reasons why there is strong cooperation among the CT activities of all the major governments and with the United States in particular, even when those governments do not agree about military cooperation or about the use of economic sanctions.
Handle: RePEc:nbr:nberwo:13729
Template-Type: ReDIF-Paper 1.0
Title: How Costly Is Hospital Quality? A Revealed-Preference Approach
Classification-JEL: D24; I11
Author-Name: John A. Romley
Author-Name: Dana Goldman
Author-Person: pgo681
Note: EH
Number: 13730
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13730
File-URL: http://www.nber.org/papers/w13730.pdf
File-Format: application/pdf
Publication-Status: published as Romley, J. A. and Goldman, D. P. (2011), How Costly is Hospital Quality? A Revealed-Preference Approach. The Journal of Industrial Economics, 59: 578–608. doi: 10.1111/j.1467-6451.2011.00468.x
Abstract: One of the most important and vexing issues in health care concerns the cost to improve quality. Unfortunately, quality is difficult to measure and potentially confounded with productivity. Rather than relying on clinical or process measures, we infer quality at hospitals in greater Los Angeles from the revealed preference of pneumonia patients. We then decompose the joint contribution of quality and unobserved productivity to hospital costs, relying on heterogeneous tastes among patients for plausibly exogenous quality variation. We find that more productive hospitals provide higher quality, demonstrating that the cost of quality improvement is substantially understated by methods that do not take into account productivity differences. After accounting for these differences, we find that a quality improvement from the 25th percentile to the 75th percentile would increase costs at the average hospital by nearly fifty percent. Improvements in traditional metrics of hospital quality such as risk-adjusted mortality are more modest, indicating that other factors such as amenities are an important driver of both hospital costs and patient choices.
Handle: RePEc:nbr:nberwo:13730
Template-Type: ReDIF-Paper 1.0
Title: Trade, Production Sharing, and the International Transmission of Business Cycles
Classification-JEL: F4; F41
Author-Name: Ariel Burstein
Author-Name: Christopher Kurz
Author-Name: Linda Tesar
Author-Person: pte111
Note: IFM ITI EFG
Number: 13731
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13731
File-URL: http://www.nber.org/papers/w13731.pdf
File-Format: application/pdf
Publication-Status: published as Burstein, Ariel & Kurz, Christopher & Tesar, Linda, 2008. "Trade, production sharing, and the international transmission of business cycles," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 775-795, May.
Abstract: Countries that are more engaged in production sharing exhibit higher bilateral manufacturing output correlations. We use data on trade flows between US multinationals and their affiliates as well as trade between the United States and Mexican maquiladoras to measure production-sharing trade and its link with the business cycle. We then develop a quantitative model of international business cycles that generates a positive link between the extent of vertically integrated production-sharing trade and internationally synchronized business cycles. A key assumption in the model is a relatively low elasticity of substitution between home and foreign inputs in the production of the vertically integrated good.
Handle: RePEc:nbr:nberwo:13731
Template-Type: ReDIF-Paper 1.0
Title: Stock-Based Compensation and CEO (Dis)Incentives
Classification-JEL: D2; G34; J3
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Eugene Kandel
Author-Person: pka128
Author-Name: Pietro Veronesi
Note: CF LS
Number: 13732
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13732
File-URL: http://www.nber.org/papers/w13732.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Eugene Kandel & Pietro Veronesi, 2010. "Stock-Based Compensation and CEO (Dis)Incentives," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1769-1820, November.
Abstract: Stock-based compensation is the standard solution to agency problems between shareholders and managers. In a dynamic rational expectations equilibrium model with asymmetric information we show that although stock-based compensation causes managers to work harder, it also induces them to hide any worsening of the firm's investment opportunities by following largely sub-optimal investment policies. This problem is especially severe for growth firms, whose stock prices then become over-valued while managers hide the bad news to shareholders. We find that a firm-specific compensation package based on both stock and earnings performance instead induces a combination of high effort, truth revelation and optimal investments. The model produces numerous predictions that are consistent with the empirical evidence.
Handle: RePEc:nbr:nberwo:13732
Template-Type: ReDIF-Paper 1.0
Title: Federal Institutions and the Democratic Transition: Learning from South Africa
Classification-JEL: H11; H77; P26
Author-Name: Robert P. Inman
Author-Name: Daniel L. Rubinfeld
Note: LE PE POL
Number: 13733
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13733
File-URL: http://www.nber.org/papers/w13733.pdf
File-Format: application/pdf
Publication-Status: published as R. P. Inman & D. L. Rubinfeld, 2012. "Federal Institutions and the Democratic Transition: Learning from South Africa," Journal of Law, Economics, and Organization, vol 28(4), pages 783-817.
Abstract: We present a model of a peaceful transition from autocracy to democracy using federal governance as a constitutional means to protect the economic interests of the once ruling elite. Under "democratic federalism" the constitution creates an annual policy game where the new majority and the elite each control one policy instrument of importance to the other. The game has a stable, stationary equilibrium that the elite may prefer to autocratic rule. We apply our analysis to South Africa's transition from white, elite rule under apartheid to a multi-racial democracy. We calibrate our model to the South African economy at the time of the transition. Stable democratic equilibria exist for plausible estimates of redistributive preferences and rate of time preference ('impatience') of the new majority during the early years of the new democracy. The future of the democratic federal bargain is less certain under the new populist presidency of Jacob Zuma.
Handle: RePEc:nbr:nberwo:13733
Template-Type: ReDIF-Paper 1.0
Title: Globalization and the Sustainability of Large Current Account Imbalances: Size Matters
Classification-JEL: F15; F21; F32; F43
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yi Sun
Note: ITI IFM
Number: 13734
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13734
File-URL: http://www.nber.org/papers/w13734.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Sun, Yi, 2010. "Globalization and the sustainability of large current account imbalances: Size matters," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 35-44, March.
Abstract: This paper evaluates the sustainability of large current account imbalances in the era when the Chinese GDP growth rate and current account/GDP exceed 10%. We investigate the size distribution and the durability of current account deficits during 1966-2005, and report the results of a simulation that relies on the adding-up property of global current account balances. Excluding the US, we find that size does matter: the length of current account deficit spells is negatively related to the relative size of the countries' GDP. We conclude that the continuation of the fast growth rate of China, while maintaining its large current account/GPD surpluses, would be constrained by the limited sustainability of the larger current account deficits/GDP of countries that grow at a much slower rate. Consequently, short of the emergence of a new "demander of last resort," the Chinese growth path would be challenged by its own success.
Handle: RePEc:nbr:nberwo:13734
Template-Type: ReDIF-Paper 1.0
Title: Federalism's Values and the Value of Federalism
Classification-JEL: H11; H77; P48
Author-Name: Robert P. Inman
Note: PE POL
Number: 13735
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13735
File-URL: http://www.nber.org/papers/w13735.pdf
File-Format: application/pdf
Abstract: What is it about federal governance that makes it so attractive to economists, political philosophers, and legal scholars and is there any evidence that would suggest all this attention is warranted? Proponents see federalism as a means to more efficient public and private economies, as the foundation for increased political participation and democratic stability, and as important check on governmental abuses of personal rights and liberties. This study provides a working definition of federal governance and classifies a sample of 73 countries as either a constitutionally-based federal democracy, an administratively-based federal democracy, a unitary democracy, a federal dictatorship, or a unitary dictatorship. Governance is then related to eleven measures of economic, democratic, and rights performance. Three conclusions follow. First, decentralized policy-making does have a unique contribution to make to a society's ability to enforce property rights, to protect political and civil rights, and then because of such rights protections, to enhance private sector economic performance. Second, while policy decentralization is the key to federalism's strong rights and economic performance and can be achieved within a unitary government by fiat, constitutionally established provincial (or state) governments provide an extra and important protective barrier for policy decentralization. Federal institutions protect policy decentralization, and policy decentralization provides federalism's valued outcomes. Third, federalism needs democracy; there is no evidence that adding policy decentralization or provinces to a dictatorship significantly improves a dictatorship's economic or rights performance.
Handle: RePEc:nbr:nberwo:13735
Template-Type: ReDIF-Paper 1.0
Title: Global Forces and Monetary Policy Effectiveness
Classification-JEL: C32; C53; E31; E32; E40; F41
Author-Name: Jean Boivin
Author-Person: pbo43
Author-Name: Marc Giannoni
Author-Person: pgi36
Note: EFG IFM ME
Number: 13736
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13736
File-URL: http://www.nber.org/papers/w13736.pdf
File-Format: application/pdf
Publication-Status: published as Global Forces and Monetary Policy Effectiveness, Jean Boivin, Marc P. Giannoni. in International Dimensions of Monetary Policy , Galí and Gertler. 2009
Abstract: In this paper, we quantify the changes in the relationship between international forces and many key US macroeconomic variables over the 1984-2005 period, and analyze changes in the monetary policy transmission mechanism. We do so by estimating a Factor-Augmented VAR on a large set of US and international data series. We find that the role of international factors in explaining US variables has been changing over the 1984-2005 period. However, while some US series have become more correlated with global factors, there is little evidence suggesting that these factors have become systematically more important. We don't find strong evidence of a change in the transmission mechanism of monetary policy due to global forces. Taking our point estimates literally, global forces do not seem to have played an important role in the US monetary transmission mechanism between 1984 and 1999. In addition, since the year 2000, the initial response of the US economy following a monetary policy shock --- the first 6 to 8 quarters --- is essentially the same as the one that has been observed in the 1984-1999 period. However, point estimates suggest that the growing importance of global forces might have contributed to reducing some of the persistence in the responses, two or more years after the shocks. Overall, we conclude that if global forces have had an effect on the monetary transmission mechanism, this is a recent phenomenon.
Handle: RePEc:nbr:nberwo:13736
Template-Type: ReDIF-Paper 1.0
Title: Beyond Revealed Preference: Choice Theoretic Foundations for Behavioral Welfare Economics
Classification-JEL: D01; D60; H40
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Antonio Rangel
Author-Person: pra69
Note: PE
Number: 13737
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13737
File-URL: http://www.nber.org/papers/w13737.pdf
File-Format: application/pdf
Publication-Status: published as B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 51-104, February.
Abstract: We propose a broad generalization of standard choice-theoretic welfare economics that encompasses a wide variety of non-standard behavioral models. Our approach exploits the coherent aspects of choice which those positive models typically attempt to capture. It replaces the standard revealed preference relation with an unambiguous choice relation: roughly, x is (strictly) unambiguously chosen over y (written xP*y) if y is never chosen when x is available. Under weak assumptions, P* is acyclic and therefore suitable for welfare analysis; it is also the most discerning welfare criterion that never overrules choice. The resulting framework generates natural counterparts for the standard tools of applied welfare economics, and is easily applied in the context of specific behavioral theories, with novel implications. Though not universally discerning, it lends itself to principled refinements.
Handle: RePEc:nbr:nberwo:13737
Template-Type: ReDIF-Paper 1.0
Title: Mixing Family With Business: A Study of Thai Business Groups and the Families Behind Them
Classification-JEL: D13; G30; J12; Z19
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Simon Johnson
Author-Person: pjo44
Author-Name: Krislert Samphantharak
Author-Person: psa1581
Author-Name: Antoinette Schoar
Author-Person: psc180
Note: CF
Number: 13738
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13738
File-URL: http://www.nber.org/papers/w13738.pdf
File-Format: application/pdf
Publication-Status: published as Bertrand, Marianne & Johnson, Simon & Samphantharak, Krislert & Schoar, Antoinette, 2008. "Mixing family with business: A study of Thai business groups and the families behind them," Journal of Financial Economics, Elsevier, vol. 88(3), pages 466-498, June.
Abstract: Families run a large fraction of business groups around the world. In this paper, we analyze how the structure of the families behind these business groups affects the groups' organization, governance and performance. To address this question, we constructed a unique data set of family trees and business groups for nearly 100 of the largest business families in Thailand. We find a strong positive association between family size and family involvement in the ownership and control of the family business. The sons of the founders play a central role in both ownership and board membership, especially when the founder of the group is gone. The availability of more sons is also associated with lower firm-level performance, especially when the founder is no longer present. We identify a possible governance channel for this performance effect. Excess control by sons, but not other family members, is associated with lower firm performance. In addition, excess control by sons increases with the number of sons and with the death of the founder. One hypothesis that emerges from our analysis is that part of the decay of family-run groups over time may be due to a dilution of ownership and control across a set of equally powerful descendants of the founder, which creates a race to the bottom in tunneling resources out of the group firms.
Handle: RePEc:nbr:nberwo:13738
Template-Type: ReDIF-Paper 1.0
Title: High Idiosyncratic Volatility and Low Returns: International and Further U.S. Evidence
Classification-JEL: F3; G12; G15
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Robert J. Hodrick
Author-Person: pho115
Author-Name: Yuhang Xing
Author-Person: pxi126
Author-Name: Xiaoyan Zhang
Author-Person: pzh588
Note: AP
Number: 13739
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13739
File-URL: http://www.nber.org/papers/w13739.pdf
File-Format: application/pdf
Publication-Status: published as Ang, Andrew & Hodrick, Robert J. & Xing, Yuhang & Zhang, Xiaoyan, 2009. "High idiosyncratic volatility and low returns: International and further U.S. evidence," Journal of Financial Economics, Elsevier, vol. 91(1), pages 1-23, January.
Abstract: Stocks with recent past high idiosyncratic volatility have low future average returns around the world. Across 23 developed markets, the difference in average returns between the extreme quintile portfolios sorted on idiosyncratic volatility is -1.31% per month, after controlling for world market, size, and value factors. The effect is individually significant in each G7 country. In the U.S., we rule out explanations based on trading frictions, information dissemination, and higher moments. There is strong comovement in the low returns to high idiosyncratic volatility stocks across countries, suggesting that broad, not easily diversifiable, factors may lie behind this phenomenon.
Handle: RePEc:nbr:nberwo:13739
Template-Type: ReDIF-Paper 1.0
Title: Sui Generis EMU
Classification-JEL: F15; N14
Author-Name: Barry Eichengreen
Author-Person: pei2
Note: IFM
Number: 13740
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13740
File-URL: http://www.nber.org/papers/w13740.pdf
File-Format: application/pdf
Abstract: The thesis of this paper is that there is no historical precedent for Europe's monetary union (EMU). While it is possible to point to similar historical experiences, the most obvious of which were in the 19th century, occurred in Europe, and had "union" as part of their names, EMU differs from these earlier monetary unions. The closer one looks the more uncomfortable one becomes with the effort to draw parallels on the basis of historical experience. It is argued that efforts to draw parallels between EMU and monetary unions past are more likely to mislead than to offer useful insights. Where history is useful is not in drawing parallels but in pinpointing differences. It is useful for highlighting what is distinctive about EMU.
Handle: RePEc:nbr:nberwo:13740
Template-Type: ReDIF-Paper 1.0
Title: Forming Priors for DSGE Models (and How it Affects the Assessment of Nominal Rigidities)
Classification-JEL: C11; C32; E3
Author-Name: Marco Del Negro
Author-Person: pde35
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 13741
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13741
File-URL: http://www.nber.org/papers/w13741.pdf
File-Format: application/pdf
Publication-Status: published as Del Negro, Marco & Schorfheide, Frank, 2008. "Forming priors for DSGE models (and how it affects the assessment of nominal rigidities)," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1191-1208, October.
Abstract: The paper discusses prior elicitation for the parameters of dynamic stochastic general equilibrium (DSGE) models, and provides a method for constructing prior distributions for a subset of these parameters from beliefs about the moments of the endogenous variables. The empirical application studies the role of price and wage rigidities in a New Keynesian DSGE model and finds that standard macro time series cannot discriminate among theories that differ in the quantitative importance of nominal frictions.
Handle: RePEc:nbr:nberwo:13741
Template-Type: ReDIF-Paper 1.0
Title: Optimal Resource Extraction Contracts Under Threat of Expropriation
Classification-JEL: H21; H25; Q33; Q34; Q38
Author-Name: Eduardo Engel
Author-Person: pen3
Author-Name: Ronald Fischer
Author-Person: pfi53
Note: EEE ITI PE
Number: 13742
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13742
File-URL: http://www.nber.org/papers/w13742.pdf
File-Format: application/pdf
Abstract: The government contracts with a foreign firm to extract a natural resource that requires an upfront investment and which faces price uncertainty. In states where profits are high, there is a likelihood of expropriation, which generates a social cost that increases with the expropriated value. In this environment, the planner's optimal contract avoids states with high probability of expropriation. The contract can be implemented via a competitive auction with reasonable informational requirements. The bidding variable is a cap on the present value of discounted revenues, and the firm with the lowest bid wins the contract. The basic framework is extended to incorporate government subsidies, unenforceable investment effort and political moral hazard, and the general thrust of the results described above is preserved.
Handle: RePEc:nbr:nberwo:13742
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Hours of Work on Social Interaction
Classification-JEL: Z1
Author-Name: Henry Saffer
Author-Person: psa935
Author-Name: Karine Lamiraud
Author-Person: pla259
Note: EH LS
Number: 13743
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13743
File-URL: http://www.nber.org/papers/w13743.pdf
File-Format: application/pdf
Publication-Status: published as Henry Saffer & Karine Lamiraud, 2012. "The effect of hours of work on social interaction," Review of Economics of the Household, Springer, vol. 10(2), pages 237-258, June.
Abstract: Over time, increases in hours of work per capita have created the intuitively plausible notion that there is less time available to pursue social interactions. The specific question addressed in this paper is the effect of hours of work on social interaction. This is a difficult empirical question since omitted factors could increase both hours of work and social interaction. The approach taken in this paper utilizes an exogenous decline in hours of work in France due to a new employment law. The results clearly show that the employment law reduced hours of work but there is no evidence that the extra hours went to increased social interactions. Although hours of work are not an important determinant of social interaction, human capital is found to be important. The effect of human capital, as measured by education and age, is positive for membership groups but negative for visiting relatives and friends. Also, contrary to expectations, there are no important differences in the determinants of social interaction by gender, marital status or parent status. Finally, a comparison between France and the US show that the response to human capital and other variables are much the same in both nations.
Handle: RePEc:nbr:nberwo:13743
Template-Type: ReDIF-Paper 1.0
Title: The Rise and (Partial) Fall of Abstract Painting in the Twentieth Century
Classification-JEL: J01
Author-Name: David Galenson
Note: LS
Number: 13744
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13744
File-URL: http://www.nber.org/papers/w13744.pdf
File-Format: application/pdf
Publication-Status: published as The Rise and (Partial) Fall of Abstract Painting in the Twentieth Century, David W. Galenson. in Conceptual Revolutions in Twentieth-Century Art, Galenson. 2009
Abstract: Non-representational painting was one of the most radical artistic innovations of the twentieth century. Abstract painting was created independently by three great pioneers - the experimental innovators Kandinsky and Mondrian, and the conceptual Malevich - virtually simultaneously, in the years immediately before and after the outbreak of World War I. It became the dominant form of advanced art in the decade after the end of World War II, as Pollock, de Kooning, Rothko, and their colleagues developed the experimental forms of Abstract Expressionism. But in the late 1950s and early '60s, Johns, Rauschenberg, Warhol, and a host of other young artists abruptly made a conceptual revolution in advanced art, and in the process reduced abstract painting to a minor role. The pioneers of abstract painting and the Abstract Expressionists had all been committed to abstraction as a vehicle for artistic discovery, and had believed that it would dominate the art of the future, but since the 1960s abstraction has become at most a part-time style for leading painters, and it is often used to mock the seriousness of earlier abstract painters.
Handle: RePEc:nbr:nberwo:13744
Template-Type: ReDIF-Paper 1.0
Title: Effects of Taxes on Economic Behavior
Classification-JEL: H2
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: PE
Number: 13745
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13745
File-URL: http://www.nber.org/papers/w13745.pdf
File-Format: application/pdf
Publication-Status: published as "Effects of Taxes on Economic Behavior," in The National Tax Journal,, Vol. LXI, No. 1, March 2008, pp 131-39. NBER Working Paper 13745, January 2008.
Abstract: This paper discusses how the effects of taxes on economic behavior are important for revenue estimation, for calculating efficiency effects, and for understanding short-term macroeconomoic consequences. The primary focus is on taxes on labor income but some attention is given to taxes on income from saving. Specific calculations illustrate the importance of behavioral responses for accurate calculation of the revenue effects and deadweight losses of tax changes.
Handle: RePEc:nbr:nberwo:13745
Template-Type: ReDIF-Paper 1.0
Title: Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance
Classification-JEL: G22; I11
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Kathleen McGarry
Author-Person: pmc264
Note: AG EH PE
Number: 13746
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13746
File-URL: http://www.nber.org/papers/w13746.pdf
File-Format: application/pdf
Publication-Status: published as David M. Cutler & Amy Finkelstein & Kathleen McGarry, 2008. "Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance," American Economic Review, American Economic Association, vol. 98(2), pages 157-62, May.
Abstract: Standard theories of insurance, dating from Rothschild and Stiglitz (1976), stress the role of adverse selection in explaining the decision to purchase insurance. In these models, higher risk people buy full or near-full insurance, while lower risk people buy less complete coverage, if they buy at all. While this prediction appears to hold in some real world insurance markets, in many others, it is the lower risk individuals who have more insurance coverage. If the standard model is extended to allow individuals to vary in their risk tolerance as well as their risk type, this could explain why the relationship between insurance coverage and risk occurrence can be of any sign, even if the standard asymmetric information effects also exist. We present empirical evidence in five difference insurance markets in the United States that is consistent with this potential role for risk tolerance. Specifically, we show that individuals who engage in risky behavior or who do not engage in risk reducing behavior are systematically less likely to hold life insurance, acute private health insurance, annuities, long-term care insurance, and Medigap. Moreover, we show that the sign of this preference effect differs across markets, tending to induce lower risk individuals to purchase insurance in some of these markets, but higher risk individuals to purchase insurance in others. These findings suggest that preference heterogeneity may be important in explaining the differential patterns of insurance coverage in various insurance markets.
Handle: RePEc:nbr:nberwo:13746
Template-Type: ReDIF-Paper 1.0
Title: Managed Care and Medical Expenditures of Medicare Beneficiaries
Classification-JEL: I11; I18
Author-Name: Michael Chernew
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Robert Town
Author-Person: pto430
Note: EH
Number: 13747
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13747
File-URL: http://www.nber.org/papers/w13747.pdf
File-Format: application/pdf
Publication-Status: published as Chernew, Michael & DeCicca, Philip & Town, Robert, 2008. "Managed care and medical expenditures of Medicare beneficiaries," Journal of Health Economics, Elsevier, vol. 27(6), pages 1451-1461, December.
Abstract: This paper investigates the impact of Medicare HMO penetration on the medical care expenditures incurred by Medicare fee-for-service enrollees. We find that increasing penetration leads to reduced health care spending on fee-for-service beneficiaries. In particular, a one percentage point increase in Medicare HMO penetration reduces such spending by .9 percent. We estimate similar models for various measures of health care utilization and find penetration-induced reductions, consistent with our spending estimates. Finally, we present evidence that suggests our estimated spending reductions are driven by beneficiaries who have at least one chronic condition.
Handle: RePEc:nbr:nberwo:13747
Template-Type: ReDIF-Paper 1.0
Title: Why Don't People Insure Late Life Consumption: A Framing Explanation of the Under-Annuitization Puzzle
Classification-JEL: G11; H55; J14
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Jeffrey R. Kling
Author-Person: pkl126
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Marian V. Wrobel
Note: AG PE
Number: 13748
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13748
File-URL: http://www.nber.org/papers/w13748.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey R. Brown & Jeffrey R. Kling & Sendhil Mullainathan & Marian V. Wrobel, 2008. "Why Don’t People Insure Late-Life Consumption? A Framing Explanation of the Under-Annuitization Puzzle," American Economic Review, American Economic Association, vol. 98(2), pages 304-09, May.
Abstract: Rational models of risk-averse consumers have difficulty explaining limited annuity demand. We posit that consumers evaluate annuity products using a narrow "investment frame" that focuses on risk and return, rather than a "consumption frame" that considers the consequences for lifelong consumption. Under an investment frame, annuities are quite unattractive, exhibiting high risk without high returns. Survey evidence supports this hypothesis: whereas 72 percent of respondents prefer a life annuity over a savings account when the choice is framed in terms of consumption, only 21 percent of respondents prefer it when the choice is framed in terms of investment features.
Handle: RePEc:nbr:nberwo:13748
Template-Type: ReDIF-Paper 1.0
Title: Inflation-Gap Persistence in the U.S.
Classification-JEL: C11; C15; C32; E3; E52
Author-Name: Timothy Cogley
Author-Person: pco39
Author-Name: Giorgio E. Primiceri
Author-Person: ppr18
Author-Name: Thomas J. Sargent
Author-Person: psa83
Note: EFG ME
Number: 13749
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13749
File-URL: http://www.nber.org/papers/w13749.pdf
File-Format: application/pdf
Publication-Status: published as Timothy Cogley & Giorgio E. Primiceri & Thomas J. Sargent, 2010. "Inflation-Gap Persistence in the US," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 43-69, January.
Abstract: We use Bayesian methods to estimate two models of post WWII U.S. inflation rates with drifting stochastic volatility and drifting coefficients. One model is univariate, the other a multivariate autoregression. We define the inflation gap as the deviation of inflation from a pure random walk component of inflation and use both of our models to study changes over time in the persistence of the inflation gap measured in terms of short- to medium-term predicability. We present evidence that our measure of the inflation-gap persistence increased until Volcker brought mean inflation down in the early 1980s and that it then fell during the chairmanships of Volcker and Greenspan. Stronger evidence for movements in inflation gap persistence emerges from the VAR than from the univariate model. We interpret these changes in terms of a simple dynamic new Keynesian model that allows us to distinguish altered monetary policy rules and altered private sector parameters.
Handle: RePEc:nbr:nberwo:13749
Template-Type: ReDIF-Paper 1.0
Title: Planning and Financial Literacy: How Do Women Fare?
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 13750
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13750
File-URL: http://www.nber.org/papers/w13750.pdf
File-Format: application/pdf
Publication-Status: published as Annamaria Lusardi & Olivia S. Mitchell, 2008. "Planning and Financial Literacy: How Do Women Fare?," American Economic Review, American Economic Association, vol. 98(2), pages 413-17, May.
Abstract: Many older US households have done little or no planning for retirement, and there is a substantial population that seems to undersave for retirement. Of particular concern is the relative position of older women, who are more vulnerable to old-age poverty due to their longer longevity. This paper uses data from a special module we devised on planning and financial literacy in the 2004 Health and Retirement Study. It shows that women display much lower levels of financial literacy than the older population as a whole. In addition, women who are less financially literate are also less likely to plan for retirement and be successful planners. These findings have important implications for policy and for programs aimed at fostering financial security at older ages.
Handle: RePEc:nbr:nberwo:13750
Template-Type: ReDIF-Paper 1.0
Title: The FOMC versus the Staff: Where Can Monetary Policymakers Add Value?
Classification-JEL: E37; E52; E58
Author-Name: Christina D. Romer
Author-Person: pro407
Author-Name: David H. Romer
Author-Person: pro406
Note: EFG ME
Number: 13751
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13751
File-URL: http://www.nber.org/papers/w13751.pdf
File-Format: application/pdf
Publication-Status: published as Christina D. Romer & David H. Romer, 2008. "The FOMC versus the Staff: Where Can Monetary Policymakers Add Value?," American Economic Review, American Economic Association, vol. 98(2), pages 230-35, May.
Abstract: Should monetary policymakers take the staff forecast of the effects of policy actions as given, or should they attempt to include additional information? This paper seeks to shed light on this question by testing the usefulness of the FOMC's own forecasts. Twice a year, the FOMC makes forecasts of major macroeconomic variables. FOMC members have access to the staff forecasts when they prepare their forecasts. We find that the optimal combination of the FOMC and staff forecasts in predicting inflation and unemployment puts a weight of essentially zero on the FOMC forecast and essentially one on the staff forecast: the FOMC appears to have no value added in forecasting. The results for predicting real growth are less clear-cut. We also find statistical and narrative evidence that differences between the FOMC and staff forecasts help predict monetary policy shocks, suggesting that policymakers act in part on the basis of their apparently misguided information.
Handle: RePEc:nbr:nberwo:13751
Template-Type: ReDIF-Paper 1.0
Title: Asymmetric Learning in Repeated Contracting: An Empirical Study
Classification-JEL: D40; D80; D82; D83; G22; L10
Author-Name: Alma Cohen
Author-Person: pco678
Note: IO LE PE
Number: 13752
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13752
File-URL: http://www.nber.org/papers/w13752.pdf
File-Format: application/pdf
Publication-Status: published as Alma Cohen, 2012. "Asymmetric Learning in Repeated Contracting: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 419-432, May.
Abstract: This paper studies a unique panel dataset of transactions with repeat customers of an insurer operating in a market in which insurers are not required by law or contract to share information about their customers' records. I use this dataset to test the asymmetric learning hypothesis that sellers obtain over time private information that some of their repeat customers have low risk, and that this learning enables sellers to make higher profits in transactions with these repeat customers. Consistent with this hypothesis, I find that the insurer in my dataset makes higher profits in transactions with repeat customers and that these profits are driven by transactions with repeat customers with good past claims history with the insurer; that these higher profits result from repeat customers with good claim history receiving a reduction in premiums that is lower than the reduction in expected costs associated with such customers; and that policyholders with bad claim history are more likely to flee their record by switching to other insurers.
Handle: RePEc:nbr:nberwo:13752
Template-Type: ReDIF-Paper 1.0
Title: Using Tax Expenditures to Achieve Energy Policy Goals
Classification-JEL: H2; H23; H24; Q42; Q48
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 13753
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13753
File-URL: http://www.nber.org/papers/w13753.pdf
File-Format: application/pdf
Publication-Status: published as Gilbert E. Metcalf, 2008. "Using Tax Expenditures to Achieve Energy Policy Goals," American Economic Review, American Economic Association, vol. 98(2), pages 90-94, May.
Abstract: Tax expenditures are a major source of support for energy related activities in the federal budget exceeding direct budget support for energy by a factor of nearly six. Focusing on the policy goals of reducing greenhouse gas emissions and petroleum consumption, I find these tax expenditures highly cost ineffective at best and counterproductive at worse. The tax credit for ethanol is an example of a cost ineffective subsidy. The cost of reducing CO2 emissions through this subsidy exceeded $1,700 per ton of CO2 avoided in 2006 and the cost of reducing oil consumption over $85 per barrel.
Handle: RePEc:nbr:nberwo:13753
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Aspects of Price Setting, and Their Policy Implications
Classification-JEL: D11; L11
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: IO
Number: 13754
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13754
File-URL: http://www.nber.org/papers/w13754.pdf
File-Format: application/pdf
Publication-Status: published as Rotemberg, Julio J. "Behavioral Aspects of Price Setting, and Their Policy Implications." In Policymaking Insights from Behavioral Economics, edited by Christopher L. Foote, Lorenz Goette, and Stephan Meier. Boston, MA: Federal Reserve Bank of Boston, 2009.
Abstract: This paper starts by discussing consumers' cognitive and emotional reaction to posted prices. Cognitively, some consumers do not appear to make effective use of price information to maximize their consumption-based utility. Emotionally, prices can induce regret and anger among consumers. The optimal responses of firm's prices to these reactions can explain why firms charge prices below marginal cost for many goods and why they keep their prices rigid. This explanation of price rigidity has the advantage of being consistent with the observation that the typical size of price increases is nearly invariant to inflation. Lastly, the paper turns to some government policies regarding prices that appear to have some consumer support. It argues that both laws against price gouging and laws regulating the terms of mortgages may have support because consumers recognize that many people do not optimize their consumption effectively and because they are angry at firms that take advantage of this. These attitudes can also explain consumer support for monetary policies that maintain a low level of average inflation.
Handle: RePEc:nbr:nberwo:13754
Template-Type: ReDIF-Paper 1.0
Title: Minimally Altruistic Wages and Unemployment in a Matching Model
Classification-JEL: D64; E24; J30; J64
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: EFG LS ME
Number: 13755
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13755
File-URL: http://www.nber.org/papers/w13755.pdf
File-Format: application/pdf
Publication-Status: published as Rotemberg, Julio J., 2008. "Minimally altruistic wages and unemployment in a matching model with monopsony," Journal of Monetary Economics, Elsevier, vol. 55(Supplemen), pages S97-S110, October.
Abstract: This paper presents a model in which firms recruit both unemployed and employed workers by posting vacancies. Firms act monopsonistically and set wages to retain their existing workers as well as to attract new ones. The model differs from Burdett and Mortensen (1998) in that its assumptions ensure that there is an equilibrium where all firms pay the same wage. The paper analyzes the response of this wage to exogenous changes in the marginal revenue product of labor. The paper finds parameters for which the response of wages is modest relative to the response of employment, as appears to be the case in U.S. data and shows that the insistence by workers that firms act with a minimal level of altruism can be a source of dampened wage responses. The paper also considers a setting where this minimal level of altruism is subject to fluctuations and shows that, for certain parameters, the model can explain both the standard deviations of employment and wages and the correlation between these two series over time.
Handle: RePEc:nbr:nberwo:13755
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Corporate Taxes on Investment and Entrepreneurship
Classification-JEL: G38; H25
Author-Name: Simeon Djankov
Author-Person: pdj4
Author-Name: Tim Ganser
Author-Name: Caralee McLiesh
Author-Name: Rita Ramalho
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: CF PE EFG
Number: 13756
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13756
File-URL: http://www.nber.org/papers/w13756.pdf
File-Format: application/pdf
Publication-Status: published as Simeon Djankov & Tim Ganser & Caralee McLiesh & Rita Ramalho & Andrei Shleifer, 2010. "The Effect of Corporate Taxes on Investment and Entrepreneurship," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(3), pages 31-64, July.
Abstract: We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy. The results are robust to the inclusion of controls for other tax rates, quality of tax administration, security of property rights, level of economic development, regulation, inflation, and openness to trade.
Handle: RePEc:nbr:nberwo:13756
Template-Type: ReDIF-Paper 1.0
Title: Institutional Adaptability and Economic Development: The Property Rights Revolution in Britain, 1700 to 1830
Classification-JEL: H1; K0; K1; N0; N43; P1; P10; P14; P16; P20; P26; P48
Author-Name: Gary Richardson
Author-Person: pri185
Author-Name: Dan Bogart
Author-Person: pbo326
Note: DAE LE POL
Number: 13757
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13757
File-URL: http://www.nber.org/papers/w13757.pdf
File-Format: application/pdf
Abstract: Adaptable property-rights institutions, we argue, foster economic development. The British example illustrates this point. Around 1700, Parliament established a forum where rights to land and resources could be reorganized. This venue enabled landholders and communities to take advantage of economic opportunities that could not be accommodated by the inflexible rights regime inherited from the past. In this essay, historical evidence, archival data, and statistical analysis demonstrate that Parliament increased the number of acts reorganizing property rights in response to increases in the public's demand for such acts. This evidence corroborates a cornerstone of our hypothesis.
Handle: RePEc:nbr:nberwo:13757
Template-Type: ReDIF-Paper 1.0
Title: Covering the Uninsured in the U.S.
Classification-JEL: H1; I1
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG CH EH LS PE
Number: 13758
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13758
File-URL: http://www.nber.org/papers/w13758.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Gruber, 2008. "Covering the Uninsured in the United States," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 571-606, September.
Abstract: One of the major social policy issues facing the U.S. in the first decade of the 21st century is the large number of Americans lacking health insurance. This article surveys the major economic issues around covering the uninsured. I review the facts on insurance coverage and the nature of the uninsured; focus on explanations for why the U.S. has such a large, and growing, uninsured population; and discuss why we should care if individuals are uninsured. I then focus on policy options to address the problem of the uninsured, beginning with a discussion of the key issues and available evidence, and then turning to estimates from a micro-simulation model of the impact of alternative interventions to increase insurance coverage.
Handle: RePEc:nbr:nberwo:13758
Template-Type: ReDIF-Paper 1.0
Title: What Do Economists Know About Crime?
Classification-JEL: K0
Author-Name: Angela K. Dills
Author-Person: pdi277
Author-Name: Jeffrey A. Miron
Author-Person: pmi250
Author-Name: Garrett Summers
Note: LE
Number: 13759
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13759
File-URL: http://www.nber.org/papers/w13759.pdf
File-Format: application/pdf
Publication-Status: published as What Do Economists Know about Crime?, Angela K. Dills, Jeffrey A. Miron, Garrett Summers. in The Economics of Crime: Lessons For and From Latin America, Di Tella, Edwards, and Schargrodsky. 2010
Abstract: In this paper we evaluate what economists have learned over the past 40 years about the determinants of crime. We base our evaluation on two kinds of evidence: an examination of aggregate data over long time periods and across countries, and a critical review of the literature. We argue that economists know little about the empirically relevant determinants of crime. Even hypotheses that find some support in U.S. data for recent decades are inconsistent with data over longer horizons or across countries. This conclusion applies both to policy variables like arrest rates or capital punishment and to less conventional factors such as abortion or gun laws. The hypothesis that drug prohibition generates violence, however, is generally consistent with the long times-series and cross-country facts. This analysis is also consistent with a broader perspective in which government policies that affect the nature and amount of dispute resolution play an important role in determining violence.
Handle: RePEc:nbr:nberwo:13759
Template-Type: ReDIF-Paper 1.0
Title: Renewable Energy Policies And Technological Innovation: Evidence Based On Patent Counts
Classification-JEL: O34; O38; Q55; Q58
Author-Name: Nick Johnstone
Author-Person: pjo89
Author-Name: Ivan Hascic
Author-Person: pha623
Author-Name: David Popp
Note: EEE PR
Number: 13760
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13760
File-URL: http://www.nber.org/papers/w13760.pdf
File-Format: application/pdf
Publication-Status: published as Nick Johnstone & Ivan HaÅ¡ÄiÄ & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
Abstract: This paper examines the effect of environmental policies on technological innovation in the specific case of renewable energy. The analysis is conducted using patent data on a panel of 25 countries over the period 1978-2003. It is found that public policy plays a significant role in determining patent applications. Different types of policy instruments are effective for different renewable energy sources.
Handle: RePEc:nbr:nberwo:13760
Template-Type: ReDIF-Paper 1.0
Title: Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison
Classification-JEL: E44; F30; N20
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM EFG ME
Number: 13761
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13761
File-URL: http://www.nber.org/papers/w13761.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2008. "Is the 2007 US Sub-prime Financial Crisis So Different? An International Historical Comparison," American Economic Review, American Economic Association, vol. 98(2), pages 339-44, May. 2008
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(3), pages 291-299, September.
Abstract: Is the 2007-2008 U.S. sub-prime mortgage financial crisis truly a new and different phenomena? Our examination of the longer historical record finds stunning qualitative and quantitative parallels to 18 earlier post-war banking crises in industrialized countries. Specifically, the run-up in U.S. equity and housing prices (which, for countries experiencing large capital inflows, stands out as the best leading indicator in the financial crisis literature) closely tracks the average of the earlier crises. Another important parallel is the inverted v-shape curve for output growth the U.S. experienced as its economy slowed in the eve of the crisis. Among other indicators, the run-up in U.S. public debt and is actually somewhat below the average of other episodes, and its pre-crisis inflation level is also lower. On the other hand, the United States current account deficit trajectory is worse than average. A critical question is whether the U.S. crisis will prove similar to the most severe industrialized-country crises, in which case growth may fall significantly below trend for an extended period. Or will it prove like one of the milder episodes, where the recovery is relatively fast? Much will depend on how large the shock to the financial system proves to be and, to a lesser extent, on the efficacy of the subsequent policy response.
Handle: RePEc:nbr:nberwo:13761
Template-Type: ReDIF-Paper 1.0
Title: Catering Through Nominal Share Prices
Classification-JEL: G12; G3
Author-Name: Malcolm Baker
Author-Person: pba735
Author-Name: Robin Greenwood
Author-Name: Jeffrey Wurgler
Author-Person: pwu8
Note: AP CF
Number: 13762
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13762
File-URL: http://www.nber.org/papers/w13762.pdf
File-Format: application/pdf
Publication-Status: published as Malcolm Baker & Robin Greenwood & Jeffrey Wurgler, 2009. "Catering through Nominal Share Prices," Journal of Finance, American Finance Association, vol. 64(6), pages 2559-2590, December.
Abstract: We propose and test a catering theory of nominal stock prices. The theory predicts that when investors place higher valuations on low-price firms, managers will maintain share prices at lower levels, and vice-versa. Using measures of time-varying catering incentives based on valuation ratios, split announcement effects, and future returns, we find empirical support for the predictions in both time-series and firm-level data. Given the strong cross-sectional relationship between capitalization and nominal share price, an interpretation of the results is that managers may be trying to categorize their firms as small firms when investors favor small firms.
Handle: RePEc:nbr:nberwo:13762
Template-Type: ReDIF-Paper 1.0
Title: To Roth or Not? -- That is the Question
Classification-JEL: G0; H0
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Ben Marx
Author-Name: David Rapson
Author-Person: pra605
Note: PE
Number: 13763
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13763
File-URL: http://www.nber.org/papers/w13763.pdf
File-Format: application/pdf
Abstract: Do regular 401(k) and IRA accounts offer greater tax benefits than Roth 401(k)s and Roth IRAs? This is a tough question. Regular 401(k)s and IRAs save taxes in the short term; Roth accounts save taxes in the long term. Regular 401(k)s and IRAs are vulnerable to future income tax hikes, but may benefit from a future switch to consumption taxation if the switch exempts withdrawals from income taxation. Roth accounts are exempt from future income tax hikes, but are exposed to future consumption taxation. For any given assumption about future tax policy, assessing the relative merits of the two types of saving vehicles requires very accurate calculations of taxes in each future year -- calculations that incorporate not just standard federal income tax provisions, but also the Savers Credit, the taxation of Social Security benefits, the Alternative Minimum Tax, and state income taxation. This paper uses ESPlanner (Economic Security Planner) -- a financial planning software program co-developed by Kotlikoff -- to study the relative merits of regular and Roth retirement accounts. In providing its consumption smoothing recommendations, ESPlanner makes the highly detailed tax and Social Security benefit calculations needed to compare retirement account options. In particular, ESPlanner can determine how different retirement account options affect different households' living standards under different assumptions about future tax policy. Our main findings are these: Absent future tax changes, middle-income, single-parent households benefit slightly more from Roth accounts; other single and married households generally fare better with a regular 401(k). Future tax changes, however, can dramatically change this horse race. In the case of low- and middle-income households, Regular 401(k) accounts under-perform Roth accounts in terms of long-run living standards assuming income taxes will rise by 30 percent in retirement. But the Roth falls far short of the regular 401(k) if taxes in retirement are assessed on consumption rather than on income and the transition to consumption taxation exempts 401(k) withdrawals from income taxation.
Handle: RePEc:nbr:nberwo:13763
Template-Type: ReDIF-Paper 1.0
Title: Effects of Weight on Children's Educational Achievement
Classification-JEL: I12; I20
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Michael Grossman
Author-Person: pgr107
Note: EH
Number: 13764
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13764
File-URL: http://www.nber.org/papers/w13764.pdf
File-Format: application/pdf
Publication-Status: published as Kaestner, Robert & Grossman, Michael, 2009. "Effects of weight on children's educational achievement," Economics of Education Review, Elsevier, vol. 28(6), pages 651-661, December.
Abstract: In this paper, we investigate the association between weight and children's educational achievement, as measured by scores on Peabody Individual Achievement Tests in math and reading, and grade attainment. Data for the study came from the 1979 cohort of the National Longitudinal Survey of Youth (NLSY), which contains a large, national sample of children between the ages of 5 and 12. We obtained estimates of the association between weight and achievement using several regression model specifications that controlled for a variety of observed characteristics of the child and his or her mother, and time-invariant characteristics of the child. Our results suggest that, in general, children who are overweight or obese have achievement test scores that are about the same as children with average weight.
Handle: RePEc:nbr:nberwo:13764
Template-Type: ReDIF-Paper 1.0
Title: Trade and Empire
Classification-JEL: F15; F33; N20; N23; N40
Author-Name: Kris James Mitchener
Author-Name: Marc Weidenmier
Author-Person: pwe14
Note: DAE
Number: 13765
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13765
File-URL: http://www.nber.org/papers/w13765.pdf
File-Format: application/pdf
Publication-Status: published as KrisJames Mitchener & Marc Weidenmier, 2008. "Trade and Empire," Economic Journal, Royal Economic Society, vol. 118(533), pages 1805-1834, November.
Abstract: Although many modern studies find large and significant effects of prior colonial status on bilateral trade, there is very little empirical research that has focused on the contemporaneous impact of empire on trade. We employ a new database of over 21,000 bilateral trade observations during the Age of High Imperialism, 1870-1913, to quantitatively assess the effect of empire on trade. Our augmented gravity model shows that belonging to an empire roughly doubled trade relative to those countries that were not part of an empire. The positive impact that empire exerts on trade does not appear to be sensitive to whether the metropole was Britain, France, Germany, Spain, or the United States or to the inclusion of other institutional factors such as being on the gold standard. In addition, we examine some of the channels through which colonial status impacted bilateral trade flows. The empirical analysis suggests that empires increased trade by lowering transactions costs and by establishing trade policies that promoted trade within empires. In particular, the use of a common language, the establishment of currency unions, the monetizing of recently acquired colonies, preferential trade arrangements, and customs unions help to account for the observed increase in trade associated with empire.
Handle: RePEc:nbr:nberwo:13765
Template-Type: ReDIF-Paper 1.0
Title: Information Disclosure and Unraveling in Matching Markets
Classification-JEL: D82; D83; I2; J0
Author-Name: Michael Ostrovsky
Author-Person: pos32
Author-Name: Michael Schwarz
Note: ED LS
Number: 13766
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13766
File-URL: http://www.nber.org/papers/w13766.pdf
File-Format: application/pdf
Publication-Status: published as Michael Ostrovsky & Michael Schwarz, 2010. "Information Disclosure and Unraveling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 34-63, May.
Abstract: This paper explores information disclosure in matching markets, e.g., the informativeness of transcripts given out by universities. We show that the same, "benchmark," amount of information is disclosed in essentially all equilibria. We then demonstrate that if universities disclose the benchmark amount of information, students and employers will not find it profitable to contract early; if they disclose more, unraveling will occur.
Handle: RePEc:nbr:nberwo:13766
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Tax Preferences on Health Spending
Classification-JEL: H2; I1
Author-Name: John F. Cogan
Author-Name: R. Glenn Hubbard
Author-Person: phu97
Author-Name: Daniel P. Kessler
Note: EH
Number: 13767
Creation-Date: 2008-01
Order-URL: http://www.nber.org/papers/w13767
File-URL: http://www.nber.org/papers/w13767.pdf
File-Format: application/pdf
Publication-Status: published as THE EFFECT OF TAX PREFERENCES ON HEALTH SPENDING AUTHOR(S) Cogan, John F.; Hubbard, R. Glenn; Kessler, Daniel P. PUB. DATE September 2011 SOURCE National Tax Journal;Sep2011, Vol. 64 Issue 3, p795
Abstract: In this paper, we estimate the effect of the tax preference for health insurance on health care spending using data from the Medical Expenditure Panel Surveys from 1996-2005. We use the fact that Social Security taxes are only levied on earnings below a statutory threshold to identify the impact of the tax preference. Because employer-sponsored health insurance premiums are excluded from Social Security payroll taxes, workers who earn just below the Social Security tax threshold receive a larger tax preference for health insurance than workers who earn just above it. We find a significant effect of the tax preference, consistent with previous research.
Handle: RePEc:nbr:nberwo:13767
Template-Type: ReDIF-Paper 1.0
Title: Cross-Border Returns Differentials
Classification-JEL: F3; G1
Author-Name: Stephanie E. Curcuru
Author-Name: Tomas Dvorak
Author-Person: pdv2
Author-Name: Francis E. Warnock
Note: IFM AP
Number: 13768
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13768
File-URL: http://www.nber.org/papers/w13768.pdf
File-Format: application/pdf
Publication-Status: published as Curcuru, S., T. Dvorak, and F. Warnock, 2008. "Cross-Border Returns Differentials." Quarterly Journal of Economics 123(4): 1495–1530
Abstract: Were the U.S. to persistently earn substantially more on its foreign investments ("U.S. claims") than foreigners earn on their U.S. investments ("U.S. liabilities"), the likelihood that the current environment of sizeable global imbalances will evolve in a benign manner increases. However, using a monthly dataset on the foreign equity and bond portfolios of U.S. investors and the U.S. equity and bond portfolios of foreign investors, we find that the returns differential for portfolio securities is near zero, far smaller than previously reported. Examining all U.S. claims and liabilities (portfolio securities as well as direct investment and banking), we find that previous estimates of large differentials are biased upward. The bias owes to computing implied returns from an internally inconsistent dataset of revised data; original data produce a much smaller differential. We also attempt to reconcile our finding of a near zero returns differential with observed patterns of cumulated current account deficits, the net international investment position, and the net income balance. Overall, we find no evidence that the U.S. can count on earning substantially more on its claims than it pays on its liabilities.
Handle: RePEc:nbr:nberwo:13768
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of City Formation
Classification-JEL: O1; O18; R0; R11
Author-Name: J. Vernon Henderson
Author-Person: phe30
Author-Name: Anthony Venables
Author-Person: pve7
Note: EFG PE
Number: 13769
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13769
File-URL: http://www.nber.org/papers/w13769.pdf
File-Format: application/pdf
Publication-Status: published as Vernon Henderson & Anthony Venables, 2009. "Dynamics of city formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 233-254, April.
Abstract: This paper examines city formation in a country whose urban population is growing steadily over time, with new cities required to accommodate this growth. In contrast to most of the literature there is immobility of housing and urban infrastructure, and investment in these assets is taken on the basis of forward-looking behavior. In the presence of these fixed assets cities form sequentially, without the population swings in existing cities that arise in current models, but with swings in house rents. Equilibrium city size, absent government, may be larger or smaller than is efficient, depending on how urban externalities vary with population. Efficient formation of cities with internalization of externalities involves local government intervention and borrowing to finance development. The paper explores the institutions required for successful local government intervention.
Handle: RePEc:nbr:nberwo:13769
Template-Type: ReDIF-Paper 1.0
Title: The Continental Dollar: What Happened to It after 1779?
Classification-JEL: N1; N11; N2; N21
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 13770
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13770
File-URL: http://www.nber.org/papers/w13770.pdf
File-Format: application/pdf
Publication-Status: published as “State Redemption of the Continental Dollar, 1779-90,” William and Mary Quarterly, 3d ser., vol. 69, no. 1 (Jan. 2012), pp. 147-180.
Abstract: Congress financed the American Revolution by issuing paper Continental Dollars. The story of the Continental Dollar is familiar to all -- a lot were issued and hyper-inflation ensued. Emissions were permanently discontinued in 1779. Thereafter, they became worthless and were forgotten. They had no impact on subsequent public finance. The veracity of the last part of this story is challenged here. Evidence is presented to establish that the disposition of the Continental Dollar remained an open question well into the 1790s. Evidence is also presented to establish the exact time path of the retirement of Continental Dollars between 1779 and 1790.
Handle: RePEc:nbr:nberwo:13770
Template-Type: ReDIF-Paper 1.0
Title: What Accounts for the Rising Sophistication of China's Exports?
Classification-JEL: F1; O1
Author-Name: Zhi Wang
Author-Person: pwa898
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 13771
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13771
File-URL: http://www.nber.org/papers/w13771.pdf
File-Format: application/pdf
Publication-Status: published as What Accounts for the Rising Sophistication of China's Exports?, Zhi Wang, Shang-Jin Wei. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: Chinese exports have become increasingly sophisticated. This has generated anxiety in developed countries as competitive pressure may increasingly be felt outside labor-intensive industries. Using product-level data on exports from different cities within China, this paper investigates the contributing factors to China's rising export sophistication. Somewhat surprisingly, neither processing trade nor foreign invested firms are found to play an important role in generating the increased overlap between China's export structure and that of high-income countries. Instead, improvement in human capital and government policies in the form of tax-favored high-tech zones appear to be the key to the country's evolving export structure. On the other hand, processing trade, foreign invested firms, and government-sponsored high-tech zones all have contributed significantly to raising the unit values of Chinese exports within a given product category.
Handle: RePEc:nbr:nberwo:13771
Template-Type: ReDIF-Paper 1.0
Title: Search and Rest Unemployment
Classification-JEL: E24; J2; J6
Author-Name: Fernando Alvarez
Author-Name: Robert Shimer
Author-Person: psh9
Note: EFG LS
Number: 13772
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13772
File-URL: http://www.nber.org/papers/w13772.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Alvarez & Robert Shimer, 2011. "Search and Rest Unemployment," Econometrica, Econometric Society, vol. 79(1), pages 75-122, 01.
Abstract: This paper extends Lucas and Prescott's (1974) search model to develop a notion of rest unemployment. The economy consists of a continuum of labor markets, each of which produces a heterogeneous good. There is a constant returns to scale production technology in each labor market, but labor productivity is continually hit by idiosyncratic shocks, inducing the costly reallocation of workers across labor markets. Under some conditions, some workers may be rest-unemployed, waiting for local labor market conditions to improve, rather than engaged in time consuming search. The model has distinct notions of unemployment (moving to a new labor market or waiting for labor market conditions to improve) and inactivity (enjoying leisure while disconnected from the labor market). We obtain closed-form expressions for key aggregate variables and use them to evaluate the model. Quantitatively, we find that in the U.S. economy many more people may be in rest unemployment than in search unemployment.
Handle: RePEc:nbr:nberwo:13772
Template-Type: ReDIF-Paper 1.0
Title: Neighborhood Violence and Urban Youth
Classification-JEL: I1; I3; J15; J24; K42
Author-Name: Anna Aizer
Author-Person: pai9
Note: CH EH LS
Number: 13773
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13773
File-URL: http://www.nber.org/papers/w13773.pdf
File-Format: application/pdf
Publication-Status: published as Neighborhood Violence and Urban Youth, Anna Aizer. in The Problems of Disadvantaged Youth: An Economic Perspective, Gruber. 2009
Abstract: Three quarters of American children have been exposed to neighborhood violence in their lifetimes. Most of the existing research has concluded that exposure to violence leads to restricted emotional development, aggressive behavior and poor school outcomes. However, this literature fails to account for the fact that children exposed to neighborhood violence are highly disadvantaged in other ways: they are more likely to be black, poor and have poorly educated parents. As such, it is not clear whether exposure to violence or the underlying measures of disadvantage are responsible for the poor child outcomes observed. Using individual survey data on urban youth and their families from Los Angeles, we find that the most violent neighborhoods are also characterized by the highest degree of disadvantage: greatest poverty, highest unemployment, least education. And while living in a violent neighborhood increases the probability of exposure to violence, within violent neighborhoods those personally exposed to street violence are significantly more disadvantaged and are more likely to associate with violent peers than their unexposed neighbors. Once we control for observed and unobserved family disadvantage, the impact of violence declines for some child outcomes, suggesting that underlying disadvantage explains some of the negative outcomes observed, but not all - it is still the case that associating with violent peers is negatively correlated with cognitive test scores. In addition, when we control for underlying differences across families, the relationship between violence and internalizing behavioral problems appears stronger.
Handle: RePEc:nbr:nberwo:13773
Template-Type: ReDIF-Paper 1.0
Title: Profiting from Government Stakes in a Command Economy: Evidence from Chinese Asset Sales
Classification-JEL: G15; G38; H11; L33
Author-Name: Charles Calomiris
Author-Person: pca421
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Yongxiang Wang
Note: CF POL
Number: 13774
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13774
File-URL: http://www.nber.org/papers/w13774.pdf
File-Format: application/pdf
Publication-Status: published as Calomiris, Charles W. & Fisman, Raymond & Wang, Yongxiang, 2010. "Profiting from government stakes in a command economy: Evidence from Chinese asset sales," Journal of Financial Economics, Elsevier, vol. 96(3), pages 399-412, June.
Abstract: We document the market response to an unexpected announcement of proposed sales of government-owned shares in China. In contrast to the "privatization premium" found in earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect in response to the announced cancellation of the government sell-off. We argue that this results from the absence of a Chinese political transition to accompany economic reforms, so that the positive effects on profits of political ties through government ownership outweigh the potential efficiency costs of government shareholdings. Companies with former government officials in management have positive abnormal returns, suggesting that personal ties can substitute for the benefits of government ownership. The "privatization discount" is higher for firms located in Special Economic Zones, where local government discretionary authority is highest. This is consistent with the view that firms in these locations are more dependent on government connections. We also find that companies with relatively high welfare payments to employees, which presumably would fall with privatization, benefit disproportionately from the privatization announcement.
Handle: RePEc:nbr:nberwo:13774
Template-Type: ReDIF-Paper 1.0
Title: The Changing Effect of HMO Market Structure: An Analysis of Penetration, Concentration, and Ownership Between 1994-2005
Classification-JEL: I11
Author-Name: Yu-Chu Shen
Author-Name: Vivian Wu
Author-Name: Glenn Melnick
Note: EH
Number: 13775
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13775
File-URL: http://www.nber.org/papers/w13775.pdf
File-Format: application/pdf
Publication-Status: published as Shen, Y., Wu, V., and Melnick, G. 2010. Trends in Hospital Cost and Revenue, 1994-2005: How Are They Related to HMO Penetration, Concentration and For-Profit Ownership. Health Services Research, 45 (1): 42-61.
Abstract: We analyze the role of three aspects of HMO market structure -- HMO penetration, HMO plan concentration, and HMO for-profit share on explaining hospital cost and revenue growth during the HMO expansion period (1994-1999) and backlash period (2000-2005). We find that HMO penetration effects differ over time: a 10 percentage point increase in HMO enrollment leads to 2.5 percent reduction in cost and revenues in the expansion period but only 0.4-1 percent reduction in the backlash period. Furthermore, this HMO backlash effect can be attributed to HMO dis-enrollment as well as the changing nature of HMO product. We find that revenue increases at a slower rate (by about 5 percent) in markets with relatively concentrated HMO markets power and more competitive hospital markets. Finally, increased for-profit HMO presence is associated with smaller cost and revenue growth, and the effect differs between low and high penetration markets.
Handle: RePEc:nbr:nberwo:13775
Template-Type: ReDIF-Paper 1.0
Title: Can pay regulation kill? Panel data evidence on the effect of labor markets on hospital performance
Classification-JEL: I18; J31; J45
Author-Name: Emma Hall
Author-Name: Carol Propper
Author-Person: ppr36
Author-Name: John Van Reenen
Author-Person: pva45
Note: LS EH
Number: 13776
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13776
File-URL: http://www.nber.org/papers/w13776.pdf
File-Format: application/pdf
Publication-Status: published as Carol Propper & John Van Reenen, 2010. "Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance," Journal of Political Economy, University of Chicago Press, vol. 118(2), pages 222-273, 04.
Abstract: Labor market regulation can have harmful unintended consequences. In many markets, especially for public sector workers, pay is regulated to be the same for individuals across heterogeneous geographical labor markets. We would predict that this will mean labor supply problems and potential falls in the quality of service provision in areas with stronger labor markets. In this paper we exploit panel data from the population of English acute hospitals where pay for medical staff is almost flat across the country. We predict that areas with higher outside wages should suffer from problems of recruiting, retaining and motivating high quality workers and this should harm hospital performance. We construct hospital-level panel data on both quality - as measured by death rates (within hospital deaths within thirty days of emergency admission for acute myocardial infarction, AMI) - and productivity. We present evidence that stronger local labor markets significantly worsen hospital outcomes in terms of quality and productivity. A 10% increase in the outside wage is associated with a 4% to 8% increase in AMI death rates. We find that an important part of this effect operates through hospitals in high outside wage areas having to rely more on temporary "agency staff" as they are unable to increase (regulated) wages in order to attract permanent employees. By contrast, we find no systematic role for an effect of outside wages of performance when we run placebo experiments in 42 other service sectors (including nursing homes) where pay is unregulated.
Handle: RePEc:nbr:nberwo:13776
Template-Type: ReDIF-Paper 1.0
Title: Marginal Jobs, Heterogeneous Firms, & Unemployment Flows
Classification-JEL: E24; E32; J63; J64
Author-Name: Michael W. L. Elsby
Author-Person: pel126
Note: EFG LS ME
Number: 13777
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13777
File-URL: http://www.nber.org/papers/w13777.pdf
File-Format: application/pdf
Publication-Status: published as Elsby, Michael W. L., and Ryan Michaels. 2013. "Marginal Jobs, Heterogeneous Firms, and Unemployment Flows." American Economic Journal: Macroeconomics, 5(1): 1-48.
Abstract: This paper introduces a notion of fir m size into a search and matching model with endogenous job destruction. The outcome is a rich, yet analytically tractable framework that can be used to analyze a broad set of features of both the cross section and the dynamics of the aggregate labor market. In a set of quantitative applications we show that the model can provide a coherent account of a) the salient features of the distributions of employer size, and employment growth across establishments; b) the amplitude and propagation of cyclical fluctuations in flows between employment and unemployment; c) the negative comovement of unemployment and vacancies in the form of the Beveridge curve; and d) the dynamics of the distribution of employer size over the business cycle.
Handle: RePEc:nbr:nberwo:13777
Template-Type: ReDIF-Paper 1.0
Title: Electricity Pricing to U.S. Manufacturing Plants, 1963-2000
Classification-JEL: L60; L94; Q40
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: Cheryl Grim
Author-Person: pgr143
Author-Name: John Haltiwanger
Author-Person: pha231
Author-Name: Mary Streitwieser
Note: EEE
Number: 13778
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13778
File-URL: http://www.nber.org/papers/w13778.pdf
File-Format: application/pdf
Abstract: We develop a large customer-level database to study electricity pricing to U.S. manufacturing plants from 1963 to 2000. We document tremendous dispersion in price per kWh, trace that dispersion to quantity discounts and spatial differentials, estimate the role of cost factors in quantity discounts, and test whether marginal price schedules conform to marginal cost and Ramsey pricing conditions. Our cost analysis and pricing tests rely on a novel empirical approach that exploits utility-level differences in the customer size distribution to estimate how supply costs vary with purchase quantity.
The results reveal that annual supply costs per kWh fall by more than half in moving from smaller to bigger purchasers, providing a clear cost-based rationale for quantity discounts. Before the mid 1970s, marginal price and marginal cost schedules are nearly identical, in line with efficient pricing. In later years, marginal supply costs exceed marginal prices for smaller manufacturing customers by 10% or more. In contrast to a clear role for cost factors, our evidence provides no support for a standard Ramsey-pricing interpretation of quantity discounts. Spatial dispersion in retail electricity prices among states, counties and utility service territories is large and rises over time for smaller purchasers.
Handle: RePEc:nbr:nberwo:13778
Template-Type: ReDIF-Paper 1.0
Title: Inflating the Beast: Political Incentives Under Uncertainty
Classification-JEL: E6; H2; H6
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Pierre Yared
Author-Person: pya107
Note: EFG IFM POL
Number: 13779
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13779
File-URL: http://www.nber.org/papers/w13779.pdf
File-Format: application/pdf
Abstract: The standard view of the political economy of public debt is that myopic and unconstrained politicians prefer to disregard intertemporal smoothing considerations and extract political rents as fast as possible. From this perspective, it seems that the world has much to celebrate, as most emerging market economies -- often suspect of having weak political institutions -- have chosen to save rather than waste most of their exceptional income from high commodity prices. Unfortunately, the optimistic conclusion that these countries may have turned the corner with respect to public resource management may be premature. In this paper we show that while it is true that in the long run there is a negative connection between the level of public debt and the quality of political institutions, this needs not be the case in the short run. Quite the opposite, in the short run, governments with weak political institutions are likely to save more than governments with better institutions facing the same uncertainty. This is due to an option value of rent-seeking whereby the prospect of potentially squandering funds in the future makes governments more "precautionary" today. We show that this result relies on three assumptions: Economic risk is high relative to political risk, markets are sufficiently incomplete, and there exists a rent-less policy-making regime.
Handle: RePEc:nbr:nberwo:13779
Template-Type: ReDIF-Paper 1.0
Title: Earnings Functions and Rates of Return
Classification-JEL: C31
Author-Name: James J. Heckman
Author-Name: Lance J. Lochner
Author-Person: plo31
Author-Name: Petra E. Todd
Note: LS
Number: 13780
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13780
File-URL: http://www.nber.org/papers/w13780.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman & Lance J. Lochner & Petra E. Todd, 2008. "Earnings Functions and Rates of Return," Journal of Human Capital, University of Chicago Press, vol. 2(1), pages 1-31.
Abstract: The internal rate of return to schooling is a fundamental economic parameter that is often used to assess whether expenditure on education should be increased or decreased. This paper considers alternative approaches to estimating marginal internal rates of return for different schooling levels. We implement a general nonparametric approach to estimate marginal internal rates of return that take into account tuition costs, income taxes and nonlinearities in the earnings-schooling-experience relationship. The returns obtained by the more general method differ substantially from Mincer returns in levels and in their evolution over time. They indicate relatively larger returns to graduating from high school than from graduating from college, although both have been increasing over time.
Handle: RePEc:nbr:nberwo:13780
Template-Type: ReDIF-Paper 1.0
Title: Assessing Urban Crime And Its Control: An Overview
Classification-JEL: K42; L1
Author-Name: Philip J. Cook
Author-Person: pco30
Note: LE
Number: 13781
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13781
File-URL: http://www.nber.org/papers/w13781.pdf
File-Format: application/pdf
Abstract: Urban crime rates in the United States fell markedly during the 1990s and remain at historically low levels. The statistical evidence presented here indicates that that decline, like the crime surge that preceded it, has been largely uncorrelated with changes in socioeconomic conditions across cities. The ups and downs of crime have a considerable effect on residential location and property values. The police represent the largest public expenditure in city-level crime control efforts, and they are increasingly held accountable for reducing crime rates. Indeed, there is considerable evidence that an increase in police expenditures does pay off in the form of lower crime rates. This is an incomplete story, however. Assessments of police effectiveness typically neglect the considerable role of private and community-level protection and control efforts, not to mention the vital importance of (uncompensated) private inputs into police investigations. In areas with endemically high violence rates, the reluctance of witnesses to cooperate remains a serious problem.
Handle: RePEc:nbr:nberwo:13781
Template-Type: ReDIF-Paper 1.0
Title: Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries
Classification-JEL: F02
Author-Name: Santiago Carbo-Valverde
Author-Person: pca189
Author-Name: Edward J. Kane
Author-Person: pka853
Author-Name: Francisco Rodriguez-Fernandez
Author-Person: pro161
Note: IFM
Number: 13782
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13782
File-URL: http://www.nber.org/papers/w13782.pdf
File-Format: application/pdf
Publication-Status: published as Santiago Carbo-Valverde & Edward Kane & Francisco Rodriguez-Fernandez, 2008. "Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries," Journal of Financial Services Research, Springer, vol. 34(2), pages 151-176, December.
Abstract: EU financial safety nets are social contracts that assign uncertain benefits and burdens to taxpayers in different member countries. To help national officials to assess their taxpayers' exposures to loss from partner countries, this paper develops a way to estimate how well markets and regulators in 14 of the EU-15 countries have controlled deposit-institution risk-shifting in recent years. Our method traverses two steps. The first step estimates leverage, return volatility, and safety-net benefits for individual EU financial institutions. For stockholder-owned banks, input data feature 1993-2004 data on stock-market capitalization. Parallel accounting values are used to calculate enterprise value (albeit less precisely) for mutual savings institutions. The second step uses the output from the first step as input into regression models of safety-net benefits and interprets the results. Parameters of the second-step models express differences in the magnitude of safety-net subsidies and in the ability of financial markets and regulators in member countries to restrain the flow of safety-net subsidies to commercial banks and savings institutions. We conclude by showing that banks from high-subsidy and low-restraint countries have initiated and received the lion's share of cross-border M&A activity. The efficiency, stabilization, and distributional effects of allowing banks to and from differently subsidized environments to expand their operations in partner countries pose policy issues that the EU ought to address.
Handle: RePEc:nbr:nberwo:13782
Template-Type: ReDIF-Paper 1.0
Title: The Diffusion of Wal-Mart and Economies of Density
Classification-JEL: L11; L81
Author-Name: Thomas J. Holmes
Author-Person: pho45
Note: PR IO
Number: 13783
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13783
File-URL: http://www.nber.org/papers/w13783.pdf
File-Format: application/pdf
Publication-Status: published as The Diffusion of Wal-Mart and Economies of Density Thomas J. Holmes† Article first published online: 14 JAN 2011 DOI: 10.3982/ECTA7699
Abstract: The roll-out of Wal-Mart store openings followed a pattern that radiated from the center out with Wal-Mart maintaining high store density and a contiguous store network all along the way. This paper estimates the benefits of such a strategy to Wal-Mart, focusing on the savings in distribution costs afforded by a dense network of stores. The paper takes a revealed preference approach, inferring the magnitude of density economies by the extent of sales cannibalization from closely-packed stores that Wal-Mart is willing to sustain to achieve density economies. The model is dynamic with rich geographic detail on the locations of stores and distribution centers. Given the enormous number of possible combinations of store-opening sequences, it is difficult to directly solve Wal-Mart's problem, making conventional approaches infeasible. The moment inequality approach is used instead and it works well. The estimates show the benefits to Wal-Mart of high store density are substantial and likely extend significantly beyond savings in trucking costs.
Handle: RePEc:nbr:nberwo:13783
Template-Type: ReDIF-Paper 1.0
Title: I'd rather be Hanged for a Sheep than a Lamb: The Unintended Consequences of 'Three-Strikes' Laws
Classification-JEL: J22; J58; K14
Author-Name: Radha Iyengar
Note: LS
Number: 13784
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13784
File-URL: http://www.nber.org/papers/w13784.pdf
File-Format: application/pdf
Abstract: Strong sentences are common "tough on crime" tool used to reduce the incentives for individuals to participate in criminal activity. However, the design of such policies often ignores other margins along which individuals interested in participating in crime may adjust. I use California's Three Strikes law to identify several effects of a large increase in the penalty for a broad set of crimes. Using criminal records data, I estimate that Three Strikes reduced participation in criminal activity by 20 percent for second-strike eligible offenders and a 28 percent decline for third-strike eligible offenders. However, I find two unintended consequences of the law. First, because Three Strikes flattened the penalty gradient with respect to severity, criminals were more likely to commit more violent crimes. Among third-strike eligible offenders, the probability of committing violent crimes increased by 9 percentage points. Second, because California's law was more harsh than the laws of other nearby states, Three Strikes had a "beggar-thy-neighbor" effect increasing the migration of criminals with second and third-strike eligibility to commit crimes in neighboring states. The high cost of incarceration combined with the high cost of violent crime relative to non-violent crime implies that Three Strikes may not be a cost-effective means of reducing crime.
Handle: RePEc:nbr:nberwo:13784
Template-Type: ReDIF-Paper 1.0
Title: 50,000 People a Day: The Use of Federally Funded Services for Intimate Partner Violence
Classification-JEL: H42; H51; I1; J12
Author-Name: Radha Iyengar
Author-Name: Lindsay Sabik
Author-Name: Cindy Southworth
Author-Name: Sarah Tucker
Author-Name: Cynthia Fraser
Note: EH LS
Number: 13785
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13785
File-URL: http://www.nber.org/papers/w13785.pdf
File-Format: application/pdf
Abstract: Intimate partner violence is a serious and preventable health problem affecting more than 30 million Americans each year. We use an innovative new research design to describe the frequency and correlates of emergency and crisis intervention services provided by domestic violence programs using safe, non-invasive collection methods. During the 24-hour survey period, 48,350 individuals used the services of primary purpose domestic violence programs, corresponding to a population rate of 16 per 100,000 people. Of these individuals, 14,518 required emergency shelter, 7,989 required transitional housing and 25,843 were provided with non-residential services. Seven times more individuals are served by domestic violence programs than are served in emergency rooms in the US on an average day. The results show unmet demand for services provided by domestic violence programs with 10 percent victims (5,183 requests) seeking services at a domestic violence provider unable to be served daily due to resource constraints. Although DV costs $5.8 billion annually, 70% of which is spent on medical costs, the government only spends $126 million annually. Thus greater funding of domestic violence programs is likely to be a cost-effective investment.
Handle: RePEc:nbr:nberwo:13785
Template-Type: ReDIF-Paper 1.0
Title: Do Hedge Funds Profit From Mutual-Fund Distress?
Classification-JEL: G12; G20; G31; H0
Author-Name: Joseph Chen
Author-Name: Samuel Hanson
Author-Person: pha1258
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Jeremy C. Stein
Author-Person: pst43
Note: CF PR AP
Number: 13786
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13786
File-URL: http://www.nber.org/papers/w13786.pdf
File-Format: application/pdf
Abstract: This paper explores the question of whether hedge funds engage in front-running strategies that exploit the predictable trades of others. One potential opportunity for front-running arises when distressed mutual funds -- those suffering large outflows of assets under management -- are forced to sell stocks they own. We document two pieces of evidence that are consistent with hedge funds taking advantage of this opportunity. First, in the time series, the average returns of long/short equity hedge funds are significantly higher in those months when a larger fraction of the mutual-fund sector is in distress. Second, at the individual stock level, short interest rises in advance of sales by distressed mutual funds.
Handle: RePEc:nbr:nberwo:13786
Template-Type: ReDIF-Paper 1.0
Title: A Maximum Likelihood Method for the Incidental Parameter Problem
Classification-JEL: C13; C23; C30
Author-Name: Marcelo Moreira
Author-Person: pmo72
Note: TWP
Number: 13787
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13787
File-URL: http://www.nber.org/papers/w13787.pdf
File-Format: application/pdf
Publication-Status: published as Aizer, Anna “Neighborhood Violence and Urban Youth” chapter in Disadvantaged Youth , Jonathon Gruber, ed. (April 2007 ) also NBER Working Paper #13773
Publication-Status: published as Marcelo J. Moreira, 2009. "A maximum likelihood method for the incidental parameter problem," The Annals of Statistics, vol 37(6A), pages 3660-3696.
Abstract: This paper uses the invariance principle to solve the incidental parameter problem. We seek group actions that preserve the structural parameter and yield a maximal invariant in the parameter space with fixed dimension. M-estimation from the likelihood of the maximal invariant statistic yields the maximum invariant likelihood estimator (MILE). We apply our method to (i) a stationary autoregressive model with fixed effects; (ii) an agent-specific monotonic transformation model; (iii) an instrumental variable (IV) model; and (iv) a dynamic panel data model with fixed effects. In the first two examples, there exist group actions that completely discard the incidental parameters. In a stationary autoregressive model with fixed effects, MILE coincides with existing conditional and integrated likelihood methods. The invariance principle also gives a new perspective to the marginal likelihood approach. In an agent-specific monotonic transformation model, our approach yields an estimator that is consistent and asymptotically normal when errors are Gaussian. In an instrumental variable (IV) model, this paper unifies asymptotic results under strong instruments (SIV) and many weak instruments (MWIV) frameworks. We obtain consistency, asymptotic normality, and optimality results for the limited information maximum likelihood estimator directly from the invariant likelihood. Our approach is parallel to M-estimation in problems in which the number of parameters does not change with the sample size. In a dynamic panel data model with N individuals and T time periods, MILE is consistent as long as NT goes to infinity. We obtain a large N, fixed T bound; this bound coincides with Hahn and Kuersteiner's (2002) bound when T goes to infinity. MILE reaches (i) our bound when N is large and T is fixed; and (ii) Hahn and Kuersteiner's (2002) bound when both N and T are large.
Handle: RePEc:nbr:nberwo:13787
Template-Type: ReDIF-Paper 1.0
Title: On Best-Response Bidding in GSP Auctions
Classification-JEL: C15; D44; L86; M37
Author-Name: Matthew Cary
Author-Name: Aparna Das
Author-Name: Benjamin Edelman
Author-Name: Ioannis Giotis
Author-Name: Kurtis Heimerl
Author-Name: Anna R. Karlin
Author-Name: Claire Mathieu
Author-Name: Michael Schwarz
Note: IO
Number: 13788
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13788
File-URL: http://www.nber.org/papers/w13788.pdf
File-Format: application/pdf
Abstract: How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN? We model ad auctions as a dynamic game of incomplete information, so we can study the convergence and robustness properties of various strategies. In particular, we consider best-response bidding strategies for a repeated auction on a single keyword, where in each round, each player chooses some optimal bid for the next round, assuming that the other players merely repeat their previous bids. We focus on a strategy we call Balanced Bidding (bb). If all players use the bb strategy, we show that bids converge to a bid vector that obtains in a complete information static model proposed by Edelman, Ostrovsky and Schwarz (2007). We prove that convergence occurs with probability 1, and we compute the expected time until convergence.
Handle: RePEc:nbr:nberwo:13788
Template-Type: ReDIF-Paper 1.0
Title: The Retirement of a Consumption Puzzle
Classification-JEL: D11; E21; J26
Author-Name: Erik Hurst
Author-Person: phu87
Note: AG EFG LS PE
Number: 13789
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13789
File-URL: http://www.nber.org/papers/w13789.pdf
File-Format: application/pdf
Publication-Status: published as “Understanding Consumption in Retirement: Recent Developments”, in Recalibrating Retirement Spending and Saving (eds, John Ameriks and Olivia Mitchell), Oxford University Press, September 2008.
Abstract: This paper summarizes five facts that have emerged from the recent literature on consumption behavior during retirement. Collectively, the recent literature has shown that there is no puzzle with respect to the spending patterns of most households as they transition into retirement. In particular, the literature has shown that there is substantial heterogeneity in spending changes at retirement across consumption categories. The declines in spending during retirement for the average household are limited to the categories of food and work related expenses. Spending in nearly all other categories of non-durable expenditure remains constant or increases. Moreover, even though food spending declines during retirement, actual food intake remains constant. The literature also shows that there is substantial heterogeneity across households in the change in expenditure associated with retirement. Much of this heterogeneity, however, can be explained by households involuntarily retiring due to deteriorating health. Overall, the literature shows that the standard model of lifecycle consumption augmented with home production and uncertain health shocks does well in explaining the consumption patterns of most households as they transition into retirement.
Handle: RePEc:nbr:nberwo:13789
Template-Type: ReDIF-Paper 1.0
Title: Inventories, Lumpy Trade, and Large Devaluations
Classification-JEL: E31; F12
Author-Name: George Alessandria
Author-Person: pal70
Author-Name: Joseph Kaboski
Author-Person: pka175
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: IFM ITI
Number: 13790
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13790
File-URL: http://www.nber.org/papers/w13790.pdf
File-Format: application/pdf
Publication-Status: published as George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "Inventories, Lumpy Trade, and Large Devaluations," American Economic Review, American Economic Association, vol. 100(5), pages 2304-39, December.
Abstract: Fixed transaction costs and delivery lags are important costs of international trade. These costs lead firms to import infrequently and hold substantially larger inventories of imported goods than domestic goods. Using multiple sources of data, we document these facts. We then show that a parsimoniously parameterized model economy with importers facing an (S, s)-type inventory management problem successfully accounts for these features of the data. Moreover, the model can account for import and import price dynamics in the aftermath of large devaluations. In particular, desired inventory adjustment in response to a sudden, large increase in the relative price of imported goods creates a short-term trade implosion, an immediate, temporary drop in the value and number of distinct varieties imported, as well as a slow increase in the retail price of imported goods. Our study of 6 current account reversals following large devaluation episodes in the last decade provide strong support for the model's predictions.
Handle: RePEc:nbr:nberwo:13790
Template-Type: ReDIF-Paper 1.0
Title: Educating Urban Children
Classification-JEL: I2
Author-Name: Richard J. Murnane
Author-Person: pmu87
Note: ED
Number: 13791
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13791
File-URL: http://www.nber.org/papers/w13791.pdf
File-Format: application/pdf
Publication-Status: published as Murnane, R.J. (2008). Educating Urban Children . In R.P Inman (Ed.), Making Cities Work: Prospects and Policies for Urban America . Princeton: Princeton University Press.
Abstract: For a variety of reasons described in the paper, improving the performance of urban school districts is more difficult today than it was several decades ago. Yet economic and social changes make performance improvement especially important today. Two quite different bodies of research provide ideas for improving the performance of urban school districts. One group of studies, conducted primarily by scholars of organizational design, examines the effectiveness of particular district management strategies. The second, conducted primarily by economists, focuses on the need to improve incentives. Each body of research offers important insights. Each is somewhat insensitive to the importance of the insights offered by the other literature. A theme of this paper is that insights from both literatures are critical to improving urban school systems.
Handle: RePEc:nbr:nberwo:13791
Template-Type: ReDIF-Paper 1.0
Title: Oil Price Movements and the Global Economy: A Model-Based Assessment
Classification-JEL: E66; F32; F47
Author-Name: Selim Elekdag
Author-Person: pel48
Author-Name: Rene Lalonde
Author-Name: Douglas Laxton
Author-Person: pla306
Author-Name: Dirk Muir
Author-Name: Paolo Pesenti
Author-Person: ppe152
Note: IFM ITI
Number: 13792
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13792
File-URL: http://www.nber.org/papers/w13792.pdf
File-Format: application/pdf
Publication-Status: published as Selim Elekdag & René Lalonde & Douglas Laxton & Dirk Muir & Paolo Pesenti, 2008. "Oil Price Movements and the Global Economy: A Model-Based Assessment," IMF Staff Papers, Palgrave Macmillan Journals, vol. 55(2), pages 297-311, June.
Abstract: We develop a five-region version (Canada, a group of oil exporting countries, the United States, emerging Asia and Japan plus the euro area) of the Global Economy Model (GEM) encompassing production and trade of crude oil, and use it to study the international transmission mechanism of shocks that drive oil prices. In the presence of real adjustment costs that reduce the short- and medium-term responses of oil supply and demand, our simulations can account for large endogenous variations of oil prices with large effects on the terms of trade of oil-exporting versus oil-importing countries (in particular, emerging Asia), and result in significant wealth transfers between regions. This is especially true when we consider a sustained increase in productivity growth or a shift in production technology towards more capital- (and hence oil-) intensive goods in regions such as emerging Asia. In addition, we study the implications of higher taxes on gasoline that are used to reduce taxes on labor income, showing that such a policy could increase world productive capacity while being consistent with a reduction in oil consumption.
Handle: RePEc:nbr:nberwo:13792
Template-Type: ReDIF-Paper 1.0
Title: Acting White or Acting Black: Mixed-Race Adolescents' Identity and Behavior
Classification-JEL: J11; J13; J15; Z13
Author-Name: Christopher Ruebeck
Author-Person: pru128
Author-Name: Susan Averett
Author-Person: pav31
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: CH LS
Number: 13793
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13793
File-URL: http://www.nber.org/papers/w13793.pdf
File-Format: application/pdf
Publication-Status: published as Christopher S. Ruebeck & Susan L. Averett & Howard N. Bodenhorn, 2009. "Acting White or Acting Black: Mixed-Race Adolescents' Identity and Behavior," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 9(1).
Abstract: Although rates of interracial marriage are on the rise, we still know relatively little about the experiences of mixed-race adolescents. In this paper, we examine the identity and behavior of mixed-race (black and white) youth. We find that mixed-race youth adopt both types of behaviors -- those that can be empirically characterized as "black" and those that can be characterized as "white". When we combine both types of behavior, average mixed-race behavior is a combination that is neither white nor black, and the variance in mixed-race behavior is generally greater than the variance in behavior of monoracial adolescents, especially as compared to the black racial group. Adolescence is the time during which there is most pressure to establish an identity, and our results indicate that mixed-race youth are finding their own distinct identities, not necessarily "joining" either monoracial group, but in another sense joining both of them.
Handle: RePEc:nbr:nberwo:13793
Template-Type: ReDIF-Paper 1.0
Title: Internal Debt Crises and Sovereign Defaults
Classification-JEL: F34; G33
Author-Name: Cristina Arellano
Author-Person: par171
Author-Name: Narayana R. Kocherlakota
Author-Person: pko25
Note: EFG IFM
Number: 13794
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13794
File-URL: http://www.nber.org/papers/w13794.pdf
File-Format: application/pdf
Publication-Status: published as Arellano, Cristina & Kocherlakota, Narayana, 2014. "Internal debt crises and sovereign defaults," Journal of Monetary Economics, Elsevier, vol. 68(S), pages S68-S80.
Abstract: In this paper, we use data from developing countries to argue that sovereign defaults are often caused by fiscal pressures generated by large-scale domestic defaults. We argue that these systemic domestic defaults are caused by shocks best interpreted as being non-fundamental. We construct a model that is consistent with these observations. The key ingredient of the model is that it is impossible to liquidate large amounts of entrepreneurial assets. This restriction generates the possibility of a domestic coordinated default crisis, in which domestic borrowers find it optimal to default because all other borrowers are also defaulting. We conclude that avoiding sovereign defaults requires better internal institutions, not better external ones.
Handle: RePEc:nbr:nberwo:13794
Template-Type: ReDIF-Paper 1.0
Title: Varieties and the Transfer Problem: The Extensive Margin of Current Account Adjustment
Classification-JEL: F32; F41
Author-Name: Giancarlo Corsetti
Author-Name: Philippe Martin
Author-Person: pma588
Author-Name: Paolo Pesenti
Author-Person: ppe152
Note: IFM
Number: 13795
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13795
File-URL: http://www.nber.org/papers/w13795.pdf
File-Format: application/pdf
Publication-Status: published as Giancarlo Corsetti & Philippe Martin & Paolo Pesenti, 2013. "Varieties and the transfer problem," Journal of International Economics, vol 89(1), pages 1-12.
Abstract: Most analyses of the macroeconomic adjustment required to correct global imbalances ignore net exports of new varieties of goods and services and do not account for firms' entry in the product market. In this paper we revisit the macroeconomics of trade adjustment in the context of the classic 'transfer problem,' using a model where the set of exportables, importables and nontraded goods is endogenous. We show that exchange rate movements associated with adjustment are dramatically lower when the above features are accounted for, relative to traditional macromodels. We also find that, for reasonable parameterizations, consumption and employment (hence welfare) are not highly sensitive to product differentiation, and change little regardless of whether adjustment occurs through movements in relative prices or quantities. This result warns against interpreting the size of real depreciation associated with trade rebalancing as an index of macroeconomic distress.
Handle: RePEc:nbr:nberwo:13795
Template-Type: ReDIF-Paper 1.0
Title: Do Real Estate Brokers Add Value When Listing Services Are Unbundled?
Classification-JEL: D14; R21; R31
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Jonathan Meer
Author-Person: pme529
Note: PE
Number: 13796
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13796
File-URL: http://www.nber.org/papers/w13796.pdf
File-Format: application/pdf
Publication-Status: published as Economic inquiry : journal of the Western Economic Association International.- Hoboken, NJ : Wiley-Blackwell, ISSN 0095-2583, ZDB-ID 1911399. - Vol. 51.2013, 2, p. 1166-1182
Abstract: This paper measures the effects of real estate brokerage services provided to sellers, other than MLS listings, on the terms and timing of home sales. It is not obvious that sellers benefit from those services. On the one hand, brokers offer potentially useful knowledge and expertise. On the other hand, because the relationship between the homeowner and the broker resembles a classical principal-agent problem, the broker may not deploy services in ways that promote the seller's interests. Yet as long as valuable MLS listings are bundled with brokerage services, homeowners may use brokers even if the agency costs exceed the benefits of brokers' knowledge and expertise. Thus, quantification of the net value of brokerage services other than MLS listings bears directly on the recent policy debate over the desirability unbundling of MLS listings. We estimate the effect of a seller's decision to use a broker on list prices, selling prices, and speed of sale for a real estate market with an unusual and critical characteristic: it has a single open-access listing service that is used by essentially all sellers, regardless of whether they employ brokers. Our central finding is that, when listings are not tied to brokerage services, a seller's use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which indicates that agency costs exceed the advantages of brokers' knowledge and expertise by a wide margin.
Handle: RePEc:nbr:nberwo:13796
Template-Type: ReDIF-Paper 1.0
Title: Optimal Provision of Multiple Excludable Public Goods
Classification-JEL: H41
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Peter Norman
Author-Person: pno6
Note: PE
Number: 13797
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13797
File-URL: http://www.nber.org/papers/w13797.pdf
File-Format: application/pdf
Publication-Status: published as Hanming Fang & Peter Norman, 2010. "Optimal Provision of Multiple Excludable Public Goods," American Economic Journal: Microeconomics, American Economic Association, vol. 2(4), pages 1-37, November.
Abstract: This paper studies the optimal provision mechanism for multiple excludable public goods when agents' valuations are private information. For a parametric class of problems with binary valuations, we demonstrate that the optimal mechanism involves bundling if a regularity condition, akin to a hazard rate condition, on the distribution of valuations is satisfied. Bundling alleviates the free riding problem in large economies in two ways: first, it may increase the asymptotic provision probability of socially efficient public goods from zero to one; second, it decreases the extent of use exclusions. If the regularity condition is violated, then the optimal solution replicates the separate provision outcome.
Handle: RePEc:nbr:nberwo:13797
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Production in 21st Century Banking
Classification-JEL: G2
Author-Name: Philip Strahan
Note: CF
Number: 13798
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13798
File-URL: http://www.nber.org/papers/w13798.pdf
File-Format: application/pdf
Abstract: I consider banks' role in providing funding liquidity (the ability to raise cash on demand) and market liquidity (the ability to trade assets at low cost), and how these roles have evolved. Traditional banks made illiquid loans funded with liquid deposits, thus producing funding liquidity on the liability side of the balance sheet. Deposits are less important in 21st century banks, but funding liquidity from lines of credit and loan commitments has become more important. Banks also provide market liquidity as broker-dealers and traders in securities and derivatives markets, in loan syndication and sales, and in loan securitization. Many institutions besides banks provide market liquidity in similar ways, but banks dominate in producing funding liquidity because of their comparative advantage in managing funding liquidity risk. This advantage stems from the structure of bank balance sheets as well as their access to government-guaranteed deposits and central-bank liquidity.
Handle: RePEc:nbr:nberwo:13798
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Impact of Climate Change on Crop Yields: The Importance of Nonlinear Temperature Effects
Classification-JEL: C23; Q54
Author-Name: Wolfram Schlenker
Author-Person: psc210
Author-Name: Michael J. Roberts
Author-Person: pro207
Note: EEE
Number: 13799
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13799
File-URL: http://www.nber.org/papers/w13799.pdf
File-Format: application/pdf
Abstract: The United States produces 41% of the world's corn and 38% of the world's soybeans, so any impact on US crop yields will have implications for world food supply. We pair a panel of county-level crop yields in the US with a fine-scale weather data set that incorporates the whole distribution of temperatures between the minimum and maximum within each day and across all days in the growing season. Yields increase in temperature until about 29C for corn, 30C for soybeans, and 32C for cotton, but temperatures above these thresholds become very harmful. The slope of the decline above the optimum is significantly steeper than the incline below it. The same nonlinear and asymmetric relationship is found whether we consider time series or cross-sectional variation in weather and yields. This suggests limited potential for adaptation within crop species because the latter includes farmers' adaptations to warmer climates and the former does not. Area-weighted average yields given current growing regions are predicted to decrease by 31-43% under the slowest warming scenario and 67-79% under the most rapid warming scenario by the end of the century.
Handle: RePEc:nbr:nberwo:13799
Template-Type: ReDIF-Paper 1.0
Title: Complexity and Targeting in Federal Student Aid: A Quantitative Analysis
Classification-JEL: H0; H21; I2; I22; I28
Author-Name: Susan Dynarski
Author-Person: pdy1
Author-Name: Judith E. Scott-Clayton
Note: ED PE
Number: 13801
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13801
File-URL: http://www.nber.org/papers/w13801.pdf
File-Format: application/pdf
Publication-Status: published as Complexity and Targeting in Federal Student Aid: A Quantitative Analysis, Susan M. Dynarski, Judith E. Scott-Clayton. in Tax Policy and the Economy, Volume 22, Poterba. 2008
Abstract: A growing body of empirical evidence shows that some financial aid programs increase college enrollment. Puzzlingly, there is little compelling evidence that Pell Grants and Stafford Loans, the primary federal student aid programs, are effective in achieving this goal. In this paper, we provide an in-depth review of this evidence, which taken as a whole suggests that complexity and uncertainty in the federal aid system undermine its efficacy. We document complexity in the aid system, comparing it in particular to complexity in the tax system. We build on our previous work by showing that complexity in the aid process does little to improve the targeting of both student loans and grants, for both dependent and independent students. We conclude that the current targeting of aid can be reproduced with a much simpler aid process. While we show that the targeting benefits of complexity are small, we further document that the costs are large. We offer new estimates of the compliance costs faced by applicants and the administrative costs borne by the government and colleges. These costs total at least $4 billion per year. The perspective of behavioral economics suggests that the true cost is even higher, since complexity and uncertainty may discourage the target population from applying for student aid.
Handle: RePEc:nbr:nberwo:13801
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Risk and Syndicate Structure
Classification-JEL: G2; G32
Author-Name: Evan Gatev
Author-Name: Philip Strahan
Note: CF
Number: 13802
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13802
File-URL: http://www.nber.org/papers/w13802.pdf
File-Format: application/pdf
Publication-Status: published as Gatev, Evan & Strahan, Philip E., 2009. "Liquidity risk and syndicate structure," Journal of Financial Economics, Elsevier, vol. 93(3), pages 490-504, September.
Abstract: We offer a new explanation of loan syndicate structure based on banks' comparative advantage in managing systematic liquidity risk. When a syndicated loan to a rated borrower has systematic liquidity risk, the fraction of passive participant lenders that are banks is about 8% higher than for loans without liquidity risk. In contrast, liquidity risk does not explain the share of banks as lead lenders. Using a new measure of ex-ante liquidity risk exposure, we find further evidence that syndicate participants specialize in liquidity-risk management while lead banks manage lending relationships. Links from transactions deposits to liquidity exposure are about 50% larger at participant banks than at lead arrangers.
Handle: RePEc:nbr:nberwo:13802
Template-Type: ReDIF-Paper 1.0
Title: Do Sex Offender Registration and Notification Laws Affect Criminal Behavior?
Classification-JEL: K14; K4
Author-Name: J.J. Prescott
Author-Name: Jonah E. Rockoff
Note: LE PE
Number: 13803
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13803
File-URL: http://www.nber.org/papers/w13803.pdf
File-Format: application/pdf
Publication-Status: published as Do Sex Offender Registration and Notification Laws Affect Criminal Behavior? J.J. Prescott and Jonah E. Rockoff Journal of Law and Economics, 2011, vol. 54, issue 1, pages 161 - 206
Abstract: In recent decades, sex offenders have been the targets of some of the most far-reaching and novel crime legislation in the U.S. Two key innovations have been registration and notification laws which, respectively, require that convicted sex offenders provide valid contact information to law enforcement authorities, and that information on sex offenders be made public. Using detailed information on the timing and scope of changes in state law, we study how registration and notification affect the frequency of sex offenses and the incidence of offenses across victims, and check for any change in police response to reported crimes. We find evidence that registration reduces the frequency of sex offenses by providing law enforcement with information on local sex offenders. As we predict from a simple model of criminal behavior, this decrease in crime is concentrated among "local" victims (e.g., friends, acquaintances, neighbors), while there is little evidence of a decrease in crimes against strangers. We also find evidence that community notification deters crime, but in a way unanticipated by legislators. Our results correspond with a model in which community notification deters first-time sex offenses, but increases recidivism by registered offenders due to a change in the relative utility of legal and illegal behavior. This finding is consistent with work by criminologists suggesting that notification may increase recidivism by imposing social and financial costs on registered sex offenders and making non-criminal activity relatively less attractive. We regard this latter finding as potentially important, given that the purpose of community notification is to reduce recidivism.
Handle: RePEc:nbr:nberwo:13803
Template-Type: ReDIF-Paper 1.0
Title: Predictive Systems: Living with Imperfect Predictors
Classification-JEL: G1; G11; G12
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Note: AP
Number: 13804
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13804
File-URL: http://www.nber.org/papers/w13804.pdf
File-Format: application/pdf
Publication-Status: published as Lubos Pástor & Robert F. Stambaugh, 2009. "Predictive Systems: Living with Imperfect Predictors," Journal of Finance, American Finance Association, vol. 64(4), pages 1583-1628, 08.
Abstract: We develop a framework for estimating expected returns—a predictive system—that allows predictors to be imperfectly correlated with the conditional expected return. When predictors are imperfect, the estimated expected return depends on past returns in a manner that hinges on the correlation between unexpected returns and innovations in expected returns. We find empirically that prior beliefs about this correlation, which is most likely negative, substantially affect estimates of expected returns as well as various inferences about predictability, including assessments of a predictor's usefulness. Compared to standard predictive regressions, predictive systems deliver different and more precise estimates of expected returns.
Handle: RePEc:nbr:nberwo:13804
Template-Type: ReDIF-Paper 1.0
Title: Rare Disasters and Exchange Rates
Classification-JEL: E43; E44; F31; G12; G15
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: AP EFG IFM
Number: 13805
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13805
File-URL: http://www.nber.org/papers/w13805.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Xavier Gabaix, 2016. "Rare Disasters and Exchange Rates," The Quarterly Journal of Economics, vol 131(1), pages 1-52.
Abstract: We propose a new model of exchange rates, which yields a theory of the forward premium puzzle. Our explanation combines two ingredients: the possibility of rare economic disasters, and an asset view of the exchange rate. Our model is frictionless, has complete markets, and works for an arbitrary number of countries. In the model, rare worldwide disasters can occur and affect each country's productivity. Each country's exposure to disaster risk varies over time according to a mean-reverting process. Risky countries command high risk premia: they feature a depreciated exchange rate and a high interest rate. As their risk premium mean reverts, their exchange rate appreciates. Therefore, currencies of high interest rate countries appreciate on average. To make the notion of disaster risk more implementable, we show how options prices might in principle uncover latent disaster risk, and help forecast exchange rate movements. We then extend the framework to incorporate two factors: a disaster risk factor, and a business cycle factor. We calibrate the model and obtain quantitatively realistic values for the volatility of the exchange rate, the forward premium puzzle regression coefficients, and near-random walk exchange rate dynamics. Finally, we solve a model of stock markets across countries, which yields a series of predictions about the joint behavior of exchange rates, bonds, options and stocks across countries. The evidence from the options market appears to be supportive of the model.
Handle: RePEc:nbr:nberwo:13805
Template-Type: ReDIF-Paper 1.0
Title: Bond Supply and Excess Bond Returns
Classification-JEL: G1; H6
Author-Name: Robin Greenwood
Author-Name: Dimitri Vayanos
Author-Person: pva498
Note: AP
Number: 13806
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13806
File-URL: http://www.nber.org/papers/w13806.pdf
File-Format: application/pdf
Publication-Status: published as Robin Greenwood & Dimitri Vayanos, 2014. "Bond Supply and Excess Bond Returns," Review of Financial Studies, Society for Financial Studies, vol. 27(3), pages 663-713.
Abstract: We examine empirically how the maturity structure of government debt affects bond yields and excess returns. Our analysis is based on a theoretical model of preferred habitat in which clienteles with strong preferences for specific maturities trade with arbitrageurs. Consistent with the model, we find that (i) the supply of long- relative to short-term bonds is positively related to the term spread, (ii) supply predicts positively long-term bonds' excess returns even after controlling for the term spread and the Cochrane-Piazzesi factor, (iii) the effects of supply are stronger for longer maturities, and (iv) following periods when arbitrageurs have lost money, both supply and the term spread are stronger predictors of excess returns.
Handle: RePEc:nbr:nberwo:13806
Template-Type: ReDIF-Paper 1.0
Title: Estimating Cross-Country Differences in Product Quality
Classification-JEL: F1; F2; F4
Author-Name: Juan Carlos Hallak
Author-Person: pha474
Author-Name: Peter K. Schott
Author-Person: psc98
Note: ITI
Number: 13807
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13807
File-URL: http://www.nber.org/papers/w13807.pdf
File-Format: application/pdf
Publication-Status: published as Juan Carlos Hallak & Peter K. Schott, 2011. "Estimating Cross-Country Differences in Product Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 417-474.
Abstract: We develop a method for decomposing countries' observed export prices into quality versus quality-adjusted-price components using information contained in their trade balances. Holding observed export prices constant, countries with surpluses are inferred to offer higher quality than countries running deficits. Our method accounts for variation in trade balances induced by horizontal and vertical differentiation. We use our method to examine manufacturing product quality among the world's top exporters from 1989 to 2003. We find that the initial quality gap between high- and low-income countries is smaller than their initial income gap, and that the former narrows considerably faster over time.
Handle: RePEc:nbr:nberwo:13807
Template-Type: ReDIF-Paper 1.0
Title: Schedule Selection by Agents: from Price Plans to Tax Tables
Classification-JEL: D42; D82; H21
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: PE
Number: 13808
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13808
File-URL: http://www.nber.org/papers/w13808.pdf
File-Format: application/pdf
Abstract: Requiring agents with private information to select from a menu of incentive schedules can yield efficiency gains. It will do so if, and only if, agents will receive further private information after selecting the incentive schedule but before taking the action that determines where on the incentive schedule they end up. We argue that this information structure is relevant in many applications. We develop the theory underlying optimal menus of non-linear schedules and prove that there exists a menu of schedules that offers a strict first-order interim Pareto improvement over the optimal single non-linear schedule. We quantify the gains from schedule selection in two settings. The first is a stylized example of a monopolistic utility company increasing profits by offering a menu of price plans. The second is a simulation based on U.S. earnings data, which shows that moving to a tax system that allows individuals to choose their tax schedule increases social welfare by the same amount as would occur from a 4.0 percent windfall gain in the government budget (or about $600 per filer per year). The resulting reduction in distortions accounts for about two thirds of the increase in social welfare while the remainder comes from an increase in redistribution.
Handle: RePEc:nbr:nberwo:13808
Template-Type: ReDIF-Paper 1.0
Title: The Divergence of Legal Procedures
Classification-JEL: K4; K41; P51
Author-Name: Aron Balas
Author-Name: Rafael La Porta
Author-Person: pla273
Author-Name: Florencio Lopez-de-Silanes
Author-Person: plo137
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: LE POL
Number: 13809
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13809
File-URL: http://www.nber.org/papers/w13809.pdf
File-Format: application/pdf
Publication-Status: published as Aron Balas & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2009. "The Divergence of Legal Procedures," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 138-62, August.
Abstract: Djankov et al. (2003a) propose and measure for 109 countries in the year 2000 an index of formalism of legal procedure for two simple disputes: eviction of a non-paying tenant and collection of a bounced check. For a sub-sample of 40 countries, we compute this index every year starting in 1950, which allows us to study the evolution of legal rules. We find that between 1950 and 2000, the formalism of legal procedure did not converge, and possibly diverged, between common law and French civil law countries. At least in this specific area of law, the results are inconsistent with the hypothesis that national legal systems are converging, and support the view that legal origins exert long lasting influence on legal rules.
Handle: RePEc:nbr:nberwo:13809
Template-Type: ReDIF-Paper 1.0
Title: The Economics and Psychology of Personality Traits
Classification-JEL: I2; J24
Author-Name: Lex Borghans
Author-Person: pbo190
Author-Name: Angela Lee Duckworth
Author-Name: James J. Heckman
Author-Name: Bas ter Weel
Author-Person: pte14
Note: CH ED LS
Number: 13810
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13810
File-URL: http://www.nber.org/papers/w13810.pdf
File-Format: application/pdf
Publication-Status: published as Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
Abstract: This paper explores the interface between personality psychology and economics. We examine the predictive power of personality and the stability of personality traits over the life cycle. We develop simple analytical frameworks for interpreting the evidence in personality psychology and suggest promising avenues for future research.
Handle: RePEc:nbr:nberwo:13810
Template-Type: ReDIF-Paper 1.0
Title: Measuring Financial Asset Return and Volatility Spillovers, With Application to Global Equity Markets
Classification-JEL: G1
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Kamil Yilmaz
Author-Person: pyi43
Note: AP IFM
Number: 13811
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13811
File-URL: http://www.nber.org/papers/w13811.pdf
File-Format: application/pdf
Publication-Status: published as FrancisX. Diebold & Kamil Yilmaz, 2009. "Measuring Financial Asset Return and Volatility Spillovers, with Application to Global Equity Markets," Economic Journal, Royal Economic Society, vol. 119(534), pages 158-171, 01.
Abstract: We provide a simple and intuitive measure of interdependence of asset returns and/or volatilities. In particular, we formulate and examine precise and separate measures of return spillovers and volatility spillovers. Our framework facilitates study of both non-crisis and crisis episodes, including trends and bursts in spillovers, and both turn out to be empirically important. In particular, in an analysis of nineteen global equity markets from the early 1990s to the present, we find striking evidence of divergent behavior in the dynamics of return spillovers vs. volatility spillovers: Return spillovers display a gently increasing trend but no bursts, whereas volatility spillovers display no trend but clear bursts.
Handle: RePEc:nbr:nberwo:13811
Template-Type: ReDIF-Paper 1.0
Title: The Cross-Section of Foreign Currency Risk Premia and Consumption Growth Risk: A Reply
Classification-JEL: F31
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Adrien Verdelhan
Author-Person: pve80
Note: AP IFM
Number: 13812
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13812
File-URL: http://www.nber.org/papers/w13812.pdf
File-Format: application/pdf
Publication-Status: published as Hanno Lustig & Adrien Verdelhan, 2011. "The Cross-Section of Foreign Currency Risk Premia and Consumption Growth Risk: Reply," American Economic Review, American Economic Association, vol. 101(7), pages 3477-3500, December.
Abstract: The U.S. consumption growth beta of an investment strategy that goes long in high interest rate currencies and short in low interest rate currencies is large and significant. The price of consumption risk is significantly different from zero, even after accounting for the sampling uncertainty introduced by the estimation of the consumption betas. The constant in the regression of average returns on consumption betas is not significant. In addition, the consumption and market betas of this investment strategy increase during recessions and times of crisis, when risk prices are high, implying that the unconditional betas understate its riskiness. We use the recent crisis as an example.
Handle: RePEc:nbr:nberwo:13812
Template-Type: ReDIF-Paper 1.0
Title: Competition in the Promised Land: Black Migration and Racial Wage Convergence in the North, 1940-1970
Classification-JEL: J61; J71; N22
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Note: DAE LS
Number: 13813
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13813
File-URL: http://www.nber.org/papers/w13813.pdf
File-Format: application/pdf
Publication-Status: published as Boustan, Leah Platt, 2009. "Competition in the Promised Land: Black Migration and Racial Wage Convergence in the North, 1940?1970," The Journal of Economic History, Cambridge University Press, vol. 69(03), pages 755-782, September.
Abstract: Four million blacks left the South from 1940 to 1970, doubling the northern black workforce. I exploit variation in migrant flows within skill groups over time to estimate the elasticity of substitution by race. I then use this estimate to calculate counterfactual rates of wage growth. I find that black wages in the North would have been around 7 percent higher in 1970 if not for the migrant influx, while white wages would have remained unchanged. On net, migration was an avenue for black economic advancement, but the migration created both winners and losers.
Handle: RePEc:nbr:nberwo:13813
Template-Type: ReDIF-Paper 1.0
Title: International Trade in Durable Goods: Understanding Volatility, Cyclicality, and Elasticities
Classification-JEL: E32; F3; F4
Author-Name: Charles Engel
Author-Person: pen14
Author-Name: Jian Wang
Note: EFG IFM ITI
Number: 13814
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13814
File-URL: http://www.nber.org/papers/w13814.pdf
File-Format: application/pdf
Publication-Status: published as Engel, Charles & Wang, Jian, 2011. "International trade in durable goods: Understanding volatility, cyclicality, and elasticities," Journal of International Economics, Elsevier, vol. 83(1), pages 37-52, January.
Abstract: Data for OECD countries document: 1. imports and exports are about three times as volatile as GDP; 2. imports and exports are pro-cyclical, and positively correlated with each other; 3. net exports are counter-cyclical. Standard models fail to replicate the behavior of imports and exports, though they can match net exports relatively well. Inspired by the fact that a large fraction of international trade is in durable goods, we propose a two-country two-sector model, in which durable goods are traded across countries. Our model can match the business cycle statistics on the volatility and comovement of the imports and exports relatively well. In addition, the model with trade in durables helps to understand the empirical regularity noted in the trade literature: home and foreign goods are highly substitutable in the long run, but the short run elasticity of substitution is low. We note that durable consumption also has implications for the appropriate measures of consumption and prices to assess risk-sharing opportunities, as in the empirical work on the Backus-Smith puzzle. The fact that our model can match data better in multiple dimensions suggests that trade in durable goods may be an important element in open-economy macro models.
Handle: RePEc:nbr:nberwo:13814
Template-Type: ReDIF-Paper 1.0
Title: A Long Term Perspective on the Euro
Classification-JEL: F02; F33; N20
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Harold James
Author-Person: pja546
Note: ME IFM POL
Number: 13815
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13815
File-URL: http://www.nber.org/papers/w13815.pdf
File-Format: application/pdf
Abstract: This study grounds the establishment of EMU and the euro in the context of the history of international monetary cooperation and of monetary unions, above all in the U.S., Germany and Italy. The purpose of national monetary unions was to reduce transactions costs of multiple currencies and thereby facilitate commerce; to reduce exchange rate volatility; and to prevent wasteful competition for seigniorage. By contrast, supranational unions, such as the Latin Monetary Union or the Scandinavian Currency Union were conducted in the broader setting of an international monetary order, the gold standard. There are closer parallels between EMU and national monetary unions. Historical monetary unions also were associated with fiscal unions (fiscal federalism). Both fiscal and monetary unions were an important part of the process of political unification. In the past, central banks, and the currencies they managed, have been discredited or put under severe strain as a result of: severe or endemic fiscal problems creating pressures for the monetization of public debt; low economic growth may produce demands for central banks to pursue more expansionary policies; regional strains producing a demand for different monetary policies to adjust to particular regional pressures; severe crises of the financial system; and tensions between the international and the domestic role of a leading currency. In particular, there is the possibility for the EMU that low rates of growth will produce direct challenges to the management of the currency, and a demand for a more politically controlled and for a more expansive monetary policy. Such demands might arise in some parts or regions or countries of the euro area, but not in others and would lead to a politically highly difficult discussion of monetary governance.
Handle: RePEc:nbr:nberwo:13815
Template-Type: ReDIF-Paper 1.0
Title: Is the GED an Effective Route to Postsecondary Education for School Dropouts?
Classification-JEL: I2; J18
Author-Name: John H. Tyler
Author-Person: pty2
Author-Name: Magnus Lofstrom
Author-Person: plo12
Note: ED
Number: 13816
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13816
File-URL: http://www.nber.org/papers/w13816.pdf
File-Format: application/pdf
Publication-Status: published as Tyler, John & Lofstrom, Magnus, 2010. "Is the GED an effective route to postsecondary education for school dropouts?," Economics of Education Review, Elsevier, vol. 29(5), pages 813-825, October.
Abstract: We use data from the Texas Schools Microdata Panel (TSMP) to examine the extent to which dropouts use the GED as a route to post-secondary education. The paper develops a model pointing out the potential biases in estimating the effects of taking the "GED path" to postsecondary education. Lacking suitable instruments that would allow us to directly address potential biases, our approach is to base our estimates on a set of academically "at risk" students who are very similar in the 8th grade. We observe that the eventual high school graduates in this group have much better postsecondary education outcomes than do the similar at-risk 8th graders who dropped out and obtained a GED. Our model explains the observed differences, and allows for a discussion of the policy challenges inherent in improving the postsecondary outcomes of dropouts.
Handle: RePEc:nbr:nberwo:13816
Template-Type: ReDIF-Paper 1.0
Title: Choice, Price Competition and Complexity in Markets for Health Insurance
Classification-JEL: I11
Author-Name: Richard Frank
Author-Name: Karine Lamiraud
Author-Person: pla259
Note: EH
Number: 13817
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13817
File-URL: http://www.nber.org/papers/w13817.pdf
File-Format: application/pdf
Publication-Status: published as Frank, Richard G. & Lamiraud, Karine, 2009. "Choice, price competition and complexity in markets for health insurance," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 550-562, August.
Abstract: The United States and other nations rely on consumer choice and price competition among competing health plans to allocate resources in the health sector. A great deal of research has examined the efficiency consequences of adverse selection in health insurance markets, less attention has been devoted to other aspects of consumer choice. The nation of Switzerland offers a unique opportunity to study price competition in health insurance markets. Switzerland regulates health insurance markets with the aim of minimizing adverse selection and encouraging strong price competition. We examine consumer responses to price differences in local markets and the degree of price variation in local markets. Using both survey data and observations on local markets we obtain evidence suggesting that as the number of choices offered to individuals grow their willingness to switch plans given a set of price dispersion differences declines allowing large price differences for relatively homogeneous products to persist. We consider explanations for this phenomenon from economics and psychology.
Handle: RePEc:nbr:nberwo:13817
Template-Type: ReDIF-Paper 1.0
Title: Do Small Businesses Create More Jobs? New Evidence from the National Establishment Time Series
Classification-JEL: J20; L25; L53
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Brandon Wall
Author-Person: pwa198
Author-Name: Junfu Zhang
Author-Person: pzh105
Note: IO LS
Number: 13818
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13818
File-URL: http://www.nber.org/papers/w13818.pdf
File-Format: application/pdf
Publication-Status: published as David Neumark & Brandon Wall & Junfu Zhang, 2011. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," Review of Economics and Statistics, vol 93(1), pages 16-29.
Abstract: We use a new database, the National Establishment Time Series (NETS), to revisit the debate about the role of small businesses in job creation. Birch (e.g., 1987) argued that small firms are the most important source of job creation in the U.S. economy, but Davis et al. (1996a) argued that this conclusion was flawed, and based on improved methods and using data for the manufacturing sector they concluded that there was no relationship between establishment size and net job creation. Using the NETS data, we examine evidence for the overall economy, as well as for different sectors. The results indicate that small establishments and small firms create more jobs, on net, although the difference is much smaller than what is suggested by Birch's methods. However, the negative relationship between establishment size and job creation is much less clear for the manufacturing sector, which may explain some of the earlier findings contradicting Birch's conclusions.
Handle: RePEc:nbr:nberwo:13818
Template-Type: ReDIF-Paper 1.0
Title: Occupational Mobility and the Business Cycle
Classification-JEL: E24; E32; J62
Author-Name: Giuseppe Moscarini
Author-Person: pmo86
Author-Name: Francis G. Vella
Author-Person: pve215
Note: EFG
Number: 13819
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13819
File-URL: http://www.nber.org/papers/w13819.pdf
File-Format: application/pdf
Abstract: Do workers sort more randomly across different job types when jobs are harder to find? To answer this question, we study the mobility of male workers among three-digit occupations in the matched files of the monthly Current Population Survey over the 1979-2004 period. We clean individual occupational transitions using the algorithm proposed by Moscarini and Thomsson (2008). We then construct a synthetic panel comprising annual birth cohorts, and we examine the respective roles of three potential determinants of career mobility: individual ex ante worker characteristics, both observable and unobservable, labor market prospects, and ex post job matching. We provide strong evidence that high unemployment somewhat offsets the role of individual worker considerations in the choice of changing career. Occupational mobility declines with age, family commitments and education, but when unemployment is high these negative effects are weaker, and reversed for college education. The cross-sectional dispersion of the monthly series of residuals is strongly countercyclical. As predicted by Moscarini (2001)'s frictional Roy model, the sorting of workers across occupations is noisier when unemployment is high. As predicted by job-matching theory, worker mobility has significant residual persistence over time. Finally, younger cohorts, among those in the sample for most of their working lives, exhibit increasingly low unexplained career mobility.
Handle: RePEc:nbr:nberwo:13819
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Interdependence and the International Role of the Dollar
Classification-JEL: F3; F4
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Author-Name: Cédric Tille
Author-Person: pti5
Note: IFM ITI ME
Number: 13820
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13820
File-URL: http://www.nber.org/papers/w13820.pdf
File-Format: application/pdf
Publication-Status: published as Goldberg, Linda & Tille, Cédric, 2009. "Macroeconomic interdependence and the international role of the dollar," Journal of Monetary Economics, Elsevier, vol. 56(7), pages 990-1003, October.
Abstract: The U.S. dollar holds a dominant place in the invoicing of international trade, along two complementary dimensions. First, most U.S. exports and imports invoiced in dollars. Second, trade flows that do not involve the United States are also substantially invoiced in dollars, an aspect that has received relatively little attention. Using a simple center-periphery model, we show that the second dimension magnifies the exposure of periphery countries to the center's monetary policy, even when direct trade flows between the center and the periphery are limited. When intra-periphery trade volumes are sensitive to the center's monetary policy, the model predicts substantial welfare gains from coordinated monetary policy. Our model also shows that even though exchange rate movements are not fully efficient, flexible exchange rates are a central component of optimal policy.
Handle: RePEc:nbr:nberwo:13820
Template-Type: ReDIF-Paper 1.0
Title: Income Maximization and the Selection and Sorting of International Migrants
Classification-JEL: F22; J61
Author-Name: Jeffrey Grogger
Author-Person: pgr125
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI LS
Number: 13821
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13821
File-URL: http://www.nber.org/papers/w13821.pdf
File-Format: application/pdf
Publication-Status: forthcoming in Grogger, Jeffrey and Gordon H. Hanson. "Income Maximization and the Selection and Sorting of International Migrants." Journal of Development Economics 95, 1 (2011): 42-57.
Abstract: Two prominent features of international labor movements are that the more educated are more likely to emigrate (positive selection) and more-educated migrants are more likely to settle in destination countries with high rewards to skill (positive sorting). Using data on emigrant stocks by schooling level and source country in OECD destinations, we find that a simple model of income maximization can account for both phenomena. Results on selection show that migrants for a source-destination pair are more educated relative to non-migrants the larger is the absolute skill-related difference in earnings between the destination country and the source. Results on sorting indicate that the relative stock of more-educated migrants in a destination is increasing in the absolute earnings difference between high and low-skilled workers. We use our framework to compare alternative specifications of international migration, estimate the magnitude of migration costs by source-destination pair, and assess the contribution of wage differences to how migrants sort themselves across destination countries.
Handle: RePEc:nbr:nberwo:13821
Template-Type: ReDIF-Paper 1.0
Title: Learning in the Credit Card Market
Classification-JEL: D1; D40; D8; G20
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: John C. Driscoll
Author-Person: pdr1
Author-Name: Xavier Gabaix
Author-Person: pga174
Author-Name: David Laibson
Author-Person: pla164
Note: AG AP LE
Number: 13822
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13822
File-URL: http://www.nber.org/papers/w13822.pdf
File-Format: application/pdf
Abstract: Agents with more experience make better choices. We measure learning dynamics using a panel with four million monthly credit card statements. We study add-on fees, specifically cash advance, late payment, and overlimit fees. New credit card accounts generate fee payments of $15 per month. Through negative feedback -- i.e. paying a fee -- consumers learn to avoid triggering future fees. Paying a fee last month reduces the likelihood of paying a fee in the current month by about 40%. Controlling for account fixed effects, monthly fee payments fall by 75% during the first three years of account life. We find that learning is not monotonic. Knowledge effectively depreciates about 10% per month, implying that learning displays a strong recency effect.
Handle: RePEc:nbr:nberwo:13822
Template-Type: ReDIF-Paper 1.0
Title: The Origins of Industrial Scientific Discoveries
Classification-JEL: D24; L33; O31; O33
Author-Name: James D. Adams
Author-Person: pad11
Author-Name: J. Roger Clemmons
Note: PR
Number: 13823
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13823
File-URL: http://www.nber.org/papers/w13823.pdf
File-Format: application/pdf
Abstract: This paper estimates science production functions for R&D-performing firms in the United States using scientific papers as the measure of output, by analogy with patents. The underlying evidence covers 200 top U.S. R&D firms during 1981-1999 as well as 110 top U.S. universities. We find that industrial science builds on past scientific research inside and outside the firm, with most of the returns to scale in production deriving from outside knowledge. In turn, the largest outside contribution derives from universities rather than firms; this is especially true when papers are weighted by citations received, a measure of their importance. Consistent with the role assigned to knowledge spillovers in growth theory, the importance of outside knowledge, especially that of universities, increases from the firm to the industry level. The findings survive the inclusion of fixed effects, interactions among the effects, variations in sample and specification, and efforts to control for endogeneity.
Handle: RePEc:nbr:nberwo:13823
Template-Type: ReDIF-Paper 1.0
Title: Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs
Classification-JEL: D14; D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 13824
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13824
File-URL: http://www.nber.org/papers/w13824.pdf
File-Format: application/pdf
Publication-Status: published as “U.S. Household Savings Behavior: The Role of Financial Literacy, Information and Financial Education Programs,” in C. Foote, L Goette, and S. Meier (eds), “ Policymaking Insights from Behavioral Economics ,” Federal Reserve Bank of Boston, 2009, pp. 109-149.
Abstract: Individuals are increasingly in charge of their own financial security after retirement. But how well-equipped are individuals to make saving decisions; do they possess adequate financial literacy, are they informed about the most important components of saving plans, do they even plan for retirement? This paper shows that financial illiteracy is widespread among the U.S. population and particularly acute among specific demographic groups, such as those with low education, women, African-Americans, and Hispanics. Moreover, close to half of older workers do not know which type of pensions they have and the large majority of workers know little about the rules governing Social Security benefits. Notwithstanding the low levels of literacy that many individuals display, very few rely on the help of experts or financial advisors to make saving and investment decisions. Low literacy and lack of information affect the ability to save and to secure a comfortable retirement; ignorance about basic financial concepts can be linked to lack of retirement planning and lack of wealth. Financial education programs can help improve saving and financial decision-making, but much more can be done to improve the effectiveness of these programs.
Handle: RePEc:nbr:nberwo:13824
Template-Type: ReDIF-Paper 1.0
Title: High Frequency Market Microstructure Noise Estimates and Liquidity Measures
Classification-JEL: C22; G12
Author-Name: Yacine Ait-Sahalia
Author-Person: pai23
Author-Name: Jialin Yu
Note: AP
Number: 13825
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13825
File-URL: http://www.nber.org/papers/w13825.pdf
File-Format: application/pdf
Publication-Status: published as Ait-Sahalia, Yacine and Jialin Yu "High Frequency Market Microstructure Noise Estimates and Liquidity Measures," Annals of Applied Statistics, 2009, 3, 422-457.
Abstract: Using recent advances in the econometrics literature, we disentangle from high frequency observations on the transaction prices of a large sample of NYSE stocks a fundamental component and a microstructure noise component. We then relate these statistical measurements of market microstructure noise to observable characteristics of the underlying stocks, and in particular to different financial measures of their liquidity. We find that more liquid stocks based on financial characteristics have lower noise and noise-to-signal ratio measured from their high frequency returns. We then examine whether there exists a common, market-wide, factor in high frequency stock-level measurements of noise, and whether that factor is priced in asset returns.
Handle: RePEc:nbr:nberwo:13825
Template-Type: ReDIF-Paper 1.0
Title: Evidence From Maternity Leave Expansions of the Impact of Maternal Care on Early Child Development
Classification-JEL: J13; J22
Author-Name: Michael Baker
Author-Person: pba400
Author-Name: Kevin Milligan
Author-Person: pmi14
Note: CH LS
Number: 13826
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13826
File-URL: http://www.nber.org/papers/w13826.pdf
File-Format: application/pdf
Publication-Status: published as Michael Baker & Kevin Milligan, 2010. "Evidence from Maternity Leave Expansions of the Impact of Maternal Care on Early Child Development," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
Abstract: We study the impact of maternal care on early child development using an expansion in Canadian maternity leave entitlements. Following the leave expansion, mothers who took leave spent between 48 and 58 percent more time not working in the first year of their children's lives. We find that this extra maternal care primarily crowded out home-based care by unlicensed non-relatives, and replaced mostly full-time work. However, the estimates suggest a weak impact of the increase in maternal care on indicators of child development. Measures of family environment and motor-social development showed changes very close to zero. Some improvements in temperament were observed but occurred both for treated and untreated children.
Handle: RePEc:nbr:nberwo:13826
Template-Type: ReDIF-Paper 1.0
Title: Toward an Efficiency Rationale for the Public Provision of Private Goods
Classification-JEL: D61; D82; H21; H42
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Peter Norman
Author-Person: pno6
Note: PE
Number: 13827
Creation-Date: 2008-02
Order-URL: http://www.nber.org/papers/w13827
File-URL: http://www.nber.org/papers/w13827.pdf
File-Format: application/pdf
Publication-Status: published as Toward an Efficiency Rationale for the Public Provision of Private Goods (with Peter Norman), This Version, June 2012, forthcoming, Economic Theory.
Abstract: This paper shows that public provision of private goods may be justified on pure efficiency grounds in an environment where individuals consume both public and private goods. The government's involvement in the provision of private goods provides it with information about individuals' private good purchases that facilitates more efficient revenue extraction for the provision of public goods. We show that public provision of the private good improves economic efficiency under a condition that is always fulfilled under stochastic independence and satisfied for an open set of joint distributions. Our model is an example where there is efficiency loss from separating revenue and expenditure problems in public finance, and is therefore of more general interest for the study of optimal taxation.
Handle: RePEc:nbr:nberwo:13827
Template-Type: ReDIF-Paper 1.0
Title: Caste, Kinship and Sex Ratios in India
Classification-JEL: J12; N35; O17
Author-Name: Tanika Chakraborty
Author-Name: Sukkoo Kim
Note: DAE
Number: 13828
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13828
File-URL: http://www.nber.org/papers/w13828.pdf
File-Format: application/pdf
Abstract: This paper explores the relationship between kinship institutions and sex ratios in India at the turn of the twentieth century. Since kinship rules varied by caste, language, religion and region, we construct sex-ratios by these categories at the district-level using data from the 1901 Census of India for Punjab (North), Bengal (East) and Madras (South). We find that the female to male sex ratio varied inversely by caste-rank, rose as one moved from the North to the East and then to the South, was lower for Hindus than Muslims, and was lower for the northern Indo-Aryan rather than the southern Dravidian speaking peoples. We also find that the female deficit was greater in wheat growing regions and in areas with higher rainfall and alluvial soil. We argue that these systematic patterns in the data are largely explained by variations in the institution of family, kinship and inheritance.
Handle: RePEc:nbr:nberwo:13828
Template-Type: ReDIF-Paper 1.0
Title: Reference Prices and Nominal Rigidities
Classification-JEL: E30
Author-Name: Martin Eichenbaum
Author-Person: pei4
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Sergio Rebelo
Note: EFG ME
Number: 13829
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13829
File-URL: http://www.nber.org/papers/w13829.pdf
File-Format: application/pdf
Publication-Status: published as Martin Eichenbaum, Nir Jaimovich and Sergio Rebelo, `Reference Prices and Nominal Rigidities’, American Economic Review , February 2011, vol. 101, issue 1, 242 272.
Abstract: We assess the importance of nominal rigidities using a new weekly scanner data set. We find that nominal rigidities are important but do not take the form of sticky prices. Instead, they take the form of inertia in reference prices and costs, defined as the most common prices and costs within a given quarter. Reference prices are particularly inertial and have an average duration of roughly one year, even though weekly prices change roughly every two weeks. We document the relation between prices and costs and find sharp evidence of state dependence in the probability of reference price changes and in the magnitude of these changes. We use a simple model to argue that reference prices and costs are useful statistics for macroeconomic analysis.
Handle: RePEc:nbr:nberwo:13829
Template-Type: ReDIF-Paper 1.0
Title: Political Entry, Public Policies, and the Economy
Classification-JEL: H11; L12; P16
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Author-Name: Kevin K. Tsui
Author-Person: pts36
Note: IO PE POL
Number: 13830
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13830
File-URL: http://www.nber.org/papers/w13830.pdf
File-Format: application/pdf
Publication-Status: published as Mulligan, Casey B. & Tsui, Kevin K., 2015. "Political entry, public policies, and the economy," Research in Economics, Elsevier, vol. 69(3), pages 377-397.
Abstract: This paper presents a theory of competition for political leadership between incumbent leaders and their challengers in which the possible equilibrium political market structures range from pure monopoly (unchallenged dictatorship) to perfectly competitive (ideal democracy). Leaders are constrained by the threat of "entry" or their ability to tax (or both), so that regimes with no challengers may nonetheless implement policies in the public interest. We offer economic interpretations of why democratic countries are associated with higher wages, why resource abundant countries tend to be nondemocratic, and how technological change affects political development. By focusing on the incentives for political entry, we show how trade sanctions and other policies designed to promote democracy may actually have the unintended consequences of discouraging political competition.
Handle: RePEc:nbr:nberwo:13830
Template-Type: ReDIF-Paper 1.0
Title: International Economic Policy: Was There a Bush Doctrine?
Classification-JEL: F0
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: IFM ITI
Number: 13831
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13831
File-URL: http://www.nber.org/papers/w13831.pdf
File-Format: application/pdf
Abstract: While many political scientists and diplomatic historians see the Bush presidency as a distinctive epoch in American foreign policy, we argue that there was no Bush Doctrine in foreign economic policy. The Bush administration sought to advance a free trade agenda but could not avoid the use of protectionist measures at home -- just like its predecessors. It foreswore bailouts of financially-distressed developing countries yet ultimately yielded to the perceived necessity of lending assistance -- just like its predecessors. Not unlike previous presidents, President Bush also maintained a stance of benign neglect toward the country's current account deficit. These continuities reflect long-standing structures and deeply embedded interests that the administration found impossible to resist. We see the next administration as having to address many of the same problems subject to the same constraints. The trade policy agenda will evolve slowly, with questions about the viability of multilateral liberalization under the WTO and the degree to which labor and environmental conditions can be included in trade agreements. Policy toward China will continue to confront difficult choices: even if it succeeds in pressuring the country to reduce its accumulation of dollar reserves, thereby easing the current account imbalance with the United States, this may only imply a more difficult market for U.S. Treasury debt and higher interest rates at home. Continuity will therefore remain the rule.
Handle: RePEc:nbr:nberwo:13831
Template-Type: ReDIF-Paper 1.0
Title: Social Learning and Peer Effects in Consumption: Evidence from Movie Sales
Classification-JEL: J0; L15
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: IO LS
Number: 13832
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13832
File-URL: http://www.nber.org/papers/w13832.pdf
File-Format: application/pdf
Publication-Status: published as Enrico Moretti, 2011. "Social Learning and Peer Effects in Consumption: Evidence from Movie Sales," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 356-393.
Abstract: Using box-office data for all movies released between 1982 and 2000, I test the implications of a simple model of social learning in which the consumption decisions of individuals depend on information they receive from their peers. The model predicts different box office sales dynamics depending on whether opening weekend demand is higher or lower than expected. I use a unique feature of the movie industry to identify ex-ante demand expectations: the number of screens dedicated to a movie in its opening weekend reflects the sales expectations held by profit-maximizing theater owners. Several pieces of evidence are consistent with social learning. First, sales of movies with positive surprise and negative surprise in opening weekend demand diverge over time. If a movie has better than expected appeal and therefore experiences larger than expected sales in week 1, consumers in week 2 update upward their expectations of quality, further increasing week 2 sales. Second, this divergence is small for movies for which consumers have strong priors and large for movies for which consumers have weak priors. Third, the effect of a surprise is stronger for audiences with large social networks. Finally, consumers do not respond to surprises in first week sales that are orthogonal to movie quality, like weather shocks. Overall, social learning appears to be an important determinant of sales in the movie industry, accounting for 38% of sales for the typical movie with positive surprise. This implies the existence of a large "social multiplier'' such that the elasticity of aggregate demand to movie quality is larger than the elasticity of individual demand to movie quality.
Handle: RePEc:nbr:nberwo:13832
Template-Type: ReDIF-Paper 1.0
Title: Identifying Agglomeration Spillovers: Evidence from Million Dollar Plants
Classification-JEL: J0; R0
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Richard Hornbeck
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: LS PR
Number: 13833
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13833
File-URL: http://www.nber.org/papers/w13833.pdf
File-Format: application/pdf
Publication-Status: published as “Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings,” (with Rick Hornbeck and Enrico Moretti). Journal of Political Economy , 2010, 118 (3): 536-598.
Abstract: We quantify agglomeration spillovers by estimating the impact of the opening of a large new manufacturing plant on the total factor productivity (TFP) of incumbent plants in the same county. Articles in the corporate real estate journal Site Selection reveal the county where the "Million Dollar Plant" ultimately chose to locate (the "winning county"), as well as the one or two runner-up counties (the "losing counties"). The incumbent plants in the losing counties are used as a counterfactual for the TFP of incumbent plants in winning counties in the absence of the plant opening. Incumbent plants in winning and losing counties have economically and statistically similar trends in TFP in the 7 years before the opening, which supports the validity of the identifying assumption. After the new plant opening, incumbent plants in winning counties experience a sharp relative increase in TFP. Five years after the opening, TFP of incumbent plants in winning counties is 12% higher than TFP of incumbent plants in losing counties. Consistent with some theories of agglomeration, this effect is larger for incumbent plants that share similar labor and technology pools with the new plant. We also find evidence of a relative increase in skill-adjusted labor costs in winning counties, indicating that the ultimate effect on profits is smaller than the direct increase in productivity.
Handle: RePEc:nbr:nberwo:13833
Template-Type: ReDIF-Paper 1.0
Title: Intermediate Goods, Weak Links, and Superstars: A Theory of Economic Development
Classification-JEL: O11; O4
Author-Name: Charles I. Jones
Author-Person: pjo24
Note: EFG
Number: 13834
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13834
File-URL: http://www.nber.org/papers/w13834.pdf
File-Format: application/pdf
Publication-Status: published as "Intermediate Goods and Weak Links in the Theory of Economic Development" American Economic Journal: Macroeconomics, April 2011, Vol. 3 (2), pp. 1-28.
Abstract: Per capita income in the richest countries of the world exceeds that in the poorest countries by more than a factor of 50. What explains these enormous differences? This paper returns to several old ideas in development economics and proposes that linkages, complementarity, and superstar effects are at the heart of the explanation. First, linkages between firms through intermediate goods deliver a multiplier similar to the one associated with capital accumulation in a neoclassical growth model. Because the intermediate goods' share of revenue is about 1/2, this multiplier is substantial. Second, just as a chain is only as strong as its weakest link, problems at any point in a production chain can reduce output substantially if inputs enter production in a complementary fashion. Finally, the high elasticity of substitution associated with final consumption delivers a superstar effect: GDP depends disproportionately on the highest levels of productivity in the economy. This paper builds a model with links across sectors, complementary inputs, and highly substitutable consumption, and shows that it can easily generate 50-fold aggregate income differences.
Handle: RePEc:nbr:nberwo:13834
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Impact of Technology Development Funds in Emerging Economies: Evidence from Latin America
Classification-JEL: O32; O38
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Alessandro Maffioli
Author-Person: pma531
Note: PR
Number: 13835
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13835
File-URL: http://www.nber.org/papers/w13835.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
Abstract: Evaluations of government Technology Development Funds (TDF) in Argentina, Brazil, Chile and Panama are surveyed. All the evaluations were done at the recipient (firm) level using data from innovation surveys, industrial surveys, and administrative records of the granting units, together with quasi-experimental econometric techniques to minimize the effects of any selection bias. TDF effectiveness is found to depend on the financing mechanism used, on the presence of non-financial constraints, on firm-university interaction, and on the characteristics of the target beneficiaries. Four levels of potential impact were considered: R&D input additionality, behavioural additionality, increases in innovative output, and improvements in performance. The evidence suggests that TDF do not crowd out private investment and that they positively affect R&D intensity. In addition, participation in TDF induces a more proactive attitude of beneficiary firms towards innovation activities. However, the analysis does not find much statistically significant impact on patents or new product sales and the evidence on firm performance is mixed, with positive results in terms of firm growth, but little corresponding positive impact on measures of firm productivity, possibly because the horizon over which the evaluation was conducted was too short.
Handle: RePEc:nbr:nberwo:13835
Template-Type: ReDIF-Paper 1.0
Title: Testing for the Economic Impact of the U.S. Constitution: Purchasing Power Parity across the Colonies versus across the States, 1748-1811
Classification-JEL: D02; F15; F54; N11; N21; N41; N71; O24; O51
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 13836
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13836
File-URL: http://www.nber.org/papers/w13836.pdf
File-Format: application/pdf
Publication-Status: published as Grubb, Farley, 2010. "Testing for the Economic Impact of the U.S. Constitution: Purchasing Power Parity Across the Colonies versus Across the States, 1748?1811," The Journal of Economic History, Cambridge University Press, vol. 70(01), pages 118-145, March.
Abstract: The U.S. Constitution removed real and monetary trade barriers between the states. By contrast, these states when they were British colonies exercised considerable real and monetary autonomy over their borders. Purchasing power parity is used to measure how much economic integration between the states was gained in the decades after the Constitution's adoption compared with what existed among the same locations during the late colonial period. The U.S. Constitution's net contribution to the economic integration of the nation is found, using this method, to be not as large as is commonly supposed.
Handle: RePEc:nbr:nberwo:13836
Template-Type: ReDIF-Paper 1.0
Title: The Increase in Leisure Inequality
Classification-JEL: E24; J22
Author-Name: Mark Aguiar
Author-Person: pag57
Author-Name: Erik Hurst
Author-Person: phu87
Note: EFG LS PE
Number: 13837
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13837
File-URL: http://www.nber.org/papers/w13837.pdf
File-Format: application/pdf
Publication-Status: published as Publisher: Aei Press (July 16, 2009) Language: English ISBN-10: 0844743135 ISBN-13: 978-0844743134
Abstract: This paper examines the changing allocation of time within the United States that has occurred between 1965 and 2003-2005. We find that the time individuals have allocated to leisure has increased in the U.S. for both men and women during this period, with almost the entire gain occurring prior to 1985. We also find that post 1985 there has been a substantial increase in leisure inequality, particularly for men. Over the last 20 years, less educated men increased the time they allocated to leisure while more educated men recorded a decrease in leisure time. While the relative decline in the employment rate of less educated men is important, trends in employment status explain less than half of the increase in the leisure gap.
Handle: RePEc:nbr:nberwo:13837
Template-Type: ReDIF-Paper 1.0
Title: The Cognitive Link Between Geography and Development: Iodine Deficiency and Schooling Attainment in Tanzania
Classification-JEL: I1; I21; O12; O55
Author-Name: Erica M. Field
Author-Name: Omar Robles
Author-Name: Máximo Torero
Author-Person: pto34
Note: EH LS
Number: 13838
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13838
File-URL: http://www.nber.org/papers/w13838.pdf
File-Format: application/pdf
Publication-Status: published as “Iodine Deficiency and Schooling Attainment in Tanzania” (with Omar Robles and Maximo Torero). American Economic Journal – Applied Economics , October 2009, 1(4):140 - 169
Abstract: An estimated 20 million children born each year are at risk of brain damage from in utero iodine deficiency, the only micronutrient deficiency known to have significant, non-reversible effects on cognitive development. Cognitive damage from iodine deficiency disorders (IDD) has potentially important implications for economic growth through its effect on human capital attainment. To gauge the magnitude of this influence, we evaluate the impact of reductions in fetal IDD on child schooling attainment that resulted from an intensive distribution of iodized oil capsules (IOC) in Tanzania. We look for evidence of improvements in cognitive ability attributable to the intervention by assessing whether children who benefited from IOC in utero exhibit higher rates of grade progression at ages 10 to 14 relative to siblings and older and younger children in the district who did not. Our findings suggest that reducing fetal IDD has significant benefits for child cognition: Protection from IDD in utero is associated with 0.36 years of additional schooling. Furthermore, the effect appears to be substantially larger for girls, consistent with new evidence from laboratory studies indicating greater cognitive sensitivity of the female fetus to maternal thyroid deprivation. There is no indication that IOC improved rates of illness or school absence due to illness, suggesting that IOC improves schooling through its effect on cognition rather than its effect on health. However, there is weak evidence that the program also reduced child but not fetal or infant mortality, which may bias downward the estimated effect on education. Cross-country regression estimates corroborate the results from Tanzania, indicating a strong negative influence of total goiter rate and strong positive influence of salt iodization on female school participation. Together, these findings provide micro-level evidence of the direct influence of ecological conditions on economic development and suggest a potentially important role of variation in rates of learning disability in explaining cross-country growth patterns and gender differences in schooling attainment.
Handle: RePEc:nbr:nberwo:13838
Template-Type: ReDIF-Paper 1.0
Title: Is There an "Emboldenment" Effect? Evidence from the Insurgency in Iraq
Classification-JEL: F51; J18
Author-Name: Radha Iyengar
Author-Name: Jonathan Monten
Note: POL
Number: 13839
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13839
File-URL: http://www.nber.org/papers/w13839.pdf
File-Format: application/pdf
Abstract: Are insurgents affected by new information about the United States' sensitivity to costs? Using data on attacks and variation in access to international news across Iraqi provinces, we identify an "emboldenment" effect by comparing the rate of insurgent attacks in areas with higher and lower access to information about U.S news after public statements critical of the war. We find that in periods after a spike in war-critical statements, insurgent attacks increases by 7-10 percent, but that this effect dissipates within a month. Additionally, we find that insurgents shift attacks from Iraqi civilian to U.S. military targets following new information about the United States' sensitivity to costs, resulting in more U.S. fatalities but fewer deaths overall. These results suggest that there is a small but measurable cost to open public debate in the form of higher attacks in the short-term, and that Iraqi insurgent organizations - even those motivated by religious or ideological goals - are strategic actors that respond rationally to the expected probability of US withdrawal. However, the implied costs of open, public debate must be weighed against the potential gains. We conclude that to the extent insurgent groups respond rationally to the incentives set by the policies of pro-government forces, effective counterinsurgency should prioritize manipulating costs and inducements, rather than focus simply on search and destroy missions.
Handle: RePEc:nbr:nberwo:13839
Template-Type: ReDIF-Paper 1.0
Title: The Role of Labor Market Changes in the Slowdown of European Productivity Growth
Classification-JEL: E0; E23; E24; E60; J20; J21; J23
Author-Name: Ian Dew-Becker
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: EFG LS PR
Number: 13840
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13840
File-URL: http://www.nber.org/papers/w13840.pdf
File-Format: application/pdf
Publication-Status: published as DEW-BECKER, I., GORDON, R.. The Role of Labor-Market Changes in the Slowdown of European Productivity Growth. Review of Economics and Institutions, North America, 3, may. 2012. Available at: . Date accessed: 20 Dec. 2013.
Abstract: Throughout the postwar era until 1995 labor productivity grew faster in Europe than in the United States. Since 1995, productivity growth in the EU-15 has slowed while that in the United States has accelerated. But Europe's productivity growth slowdown was largely offset by faster growth in employment per capita, leaving little difference in growth of output per capita between the EU and US going back to 1980. This paper is about the strong negative tradeoff between productivity and employment growth within Europe. We document this tradeoff in the raw data, in regressions that control for the two-way causation between productivity and employment growth, and we show that there is a robust negative correlation between productivity and employment growth across countries and time. Our primary explanatory variables to explain both the revival of EU employment growth and the slowdown in productivity growth include six policy and institutional variables. We find that several of these variables have significant negative effects on employment per capita, both before and after 1995. We also find a significant time effect, that the increase in European employment per capita increased after 1995 for reasons that go beyond our six explanatory variables, and we link this time effect to a secular increase in the labor-force participation of women, particularly in southern European countries. We conclude by suggesting that evaluations of alternative policy reforms in Europe should take into account any offsetting effects on employment and productivity by examining the ultimate impact on changes in income per capita.
Handle: RePEc:nbr:nberwo:13840
Template-Type: ReDIF-Paper 1.0
Title: Globalization and the Great Divergence: Terms of Trade Booms and Volatility in the Poor Periphery 1782-1913
Classification-JEL: F01; N7; O2
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 13841
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13841
File-URL: http://www.nber.org/papers/w13841.pdf
File-Format: application/pdf
Publication-Status: published as Williamson, Jeffrey G., 2008. "Globalization and the Great Divergence: terms of trade booms, volatility and the poor periphery, 1782?1913," European Review of Economic History, Cambridge University Press, vol. 12(03), pages 355-391, December.
Abstract: W. Arthur Lewis argued that a new international economic order emerged between 1870 and 1913, and that global terms of trade forces produced rising primary product specialization and de-industrialization in the poor periphery. More recently, modern economists argue that volatility reduces growth in the poor periphery. This paper assess these de-industrialization and volatility forces between 1782 and 1913 during the Great Divergence. First, it argues that the new economic order had been firmly established by 1870, and that the transition took place in the century before, not after. Second, based on econometric evidence from 1870-1939, we know that while a terms of trade improvement raised long run growth in the rich core, it did not do so in the poor periphery. Given that the secular terms of trade boom in the poor periphery was much bigger over the century before 1870 than after, it seems plausible to infer that it might help explain the great 19th century divergence between core and periphery. Third, the boom and its de-industrialization impact was only part of the story; growth-reducing terms of trade volatility was the other. Between 1820 and 1870, terms of trade volatility was much greater in the poor periphery than the core. It was still very big after 1870, certainly far bigger than in the core. Based on econometric evidence from 1870-2000, we know that terms of trade volatility lowers long run growth in the poor periphery, and that the negative impact is big. Given that terms of trade volatility in the poor periphery was even bigger during the century before 1870, it seems plausible to infer that it also helps explain the great 19th century divergence between core and periphery.
Handle: RePEc:nbr:nberwo:13841
Template-Type: ReDIF-Paper 1.0
Title: Capital Inflows and Reserve Accumulation: The Recent Evidence
Classification-JEL: E0; F0; F3
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Vincent R. Reinhart
Note: IFM
Number: 13842
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13842
File-URL: http://www.nber.org/papers/w13842.pdf
File-Format: application/pdf
Publication-Status: published as Reinhart, Carmen M. & Reinhart, Vincent R., 2011. "Entrada de capitales y acumulación de reservas: evidencia reciente," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 20, pages 15-25.
Abstract: Over the past decade, policymakers in many emerging market economies have opted to limit fluctuations of the value of their domestic currencies relative to the U.S. dollar. A simple interest-parity relationship is used to identify the potential sources of upward pressure on the value of a foreign exchange rate and to explain the policy options to damp them. The paper then documents the extent to which the accumulation of foreign exchange reserves has been sterilized and provides a comprehensive list of major policy initiatives related to stemming forces that would otherwise appreciate the exchange rate in over one hundred countries. This examination of policy efforts shows that a wide variety of tools are used in the attempt to stem the tide of capital flows.
Handle: RePEc:nbr:nberwo:13842
Template-Type: ReDIF-Paper 1.0
Title: Does Temporary Help Work Provide a Stepping Stone to Regular Employment?
Classification-JEL: C31; J40; J62; J64
Author-Name: Michael Kvasnicka
Author-Person: pkv2
Note: LS
Number: 13843
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13843
File-URL: http://www.nber.org/papers/w13843.pdf
File-Format: application/pdf
Publication-Status: published as Does Temporary Help Work Provide a Stepping Stone to Regular Employment?, Michael Kvasnicka. in Studies of Labor Market Intermediation , Autor. 2009
Abstract: Based on administrative data from the federal employment services in Germany, this paper applies statistical matching techniques to estimate the stepping-stone function to regular employment of temporary help work for unemployed job seekers. Our results show that workers who enter temporary help work from registered unemployment do not enjoy subsequent greater chances of employment outside temporary help work over a four-year period. Neither, however, do they suffer from future greater risks of unemployment. While our results, therefore, do not lend empirical support to a stepping-stone function of temporary help employment for the unemployed, they do neither confirm the existence of adverse effects on the future regular employment and unemployment chances of unemployed job seekers. If anything, temporary help work seems to provide an access-to-work function for the unemployed.
Handle: RePEc:nbr:nberwo:13843
Template-Type: ReDIF-Paper 1.0
Title: Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance
Classification-JEL: H21; J22; J33
Author-Name: Raj Chetty
Author-Person: pch161
Note: LS PE
Number: 13844
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13844
File-URL: http://www.nber.org/papers/w13844.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty, 2009. "Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 31-52, August.
Abstract: Since Feldstein (1999), the most widely used method of calculating the excess burden of income taxation is to estimate the effect of tax rates on reported taxable income. This paper reevaluates the taxable income elasticity as a measure of excess burden when individuals can evade or avoid taxes. In many cases, part of the cost of evasion and avoidance reflects a transfer to another agent in the economy. I show that in such situations, excess burden depends on a weighted average of the taxable income and total earned income elasticities, with the weight determined by the marginal resource cost of sheltering income from taxation. This generalized formula implies that the efficiency cost of taxing high income individuals is not necessarily large despite evidence that their reported incomes are highly sensitive to tax rates.
Handle: RePEc:nbr:nberwo:13844
Template-Type: ReDIF-Paper 1.0
Title: Language in Visual Art: The Twentieth Century
Classification-JEL: J01
Author-Name: David Galenson
Note: LS
Number: 13845
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13845
File-URL: http://www.nber.org/papers/w13845.pdf
File-Format: application/pdf
Publication-Status: published as Language in Visual Art, David W. Galenson. in Conceptual Revolutions in Twentieth-Century Art, Galenson. 2009
Abstract: Words have appeared in visual art since classical times, but until the modern era their use was generally restricted to a few specific functions. In the early twentieth century, the Cubists Braque and Picasso began using words in their paintings and collages in entirely new ways, and their innovation was quickly adopted by other artists. Words, phrases, and sentences were subsequently used by visual artists for a variety of purposes -- to refer to popular culture, to pose verbal puzzles, to engage with philosophy and semiotics, and for political and social commentary. Throughout the century, the use of language in visual art was dominated by conceptual artists, and the increasing role of language over time was symptomatic of the fact that visual art was progressively intended less as an aesthetic product, to be looked at, and increasingly as an intellectual activity, to be read. The prominence of language is yet another way in which the visual art of the twentieth century differs from all earlier periods, as a result of the increasingly extreme practices of conceptual artists after the development of a competitive market for advanced art in the late nineteenth century freed them from the constraints that had previously been imposed by governments and other powerful patrons.
Handle: RePEc:nbr:nberwo:13845
Template-Type: ReDIF-Paper 1.0
Title: Global Rebalancing with Gravity: Measuring the Burden of Adjustment
Classification-JEL: F10; F32; F41
Author-Name: Robert Dekle
Author-Person: pde414
Author-Name: Jonathan Eaton
Author-Person: pea5
Author-Name: Samuel Kortum
Author-Person: pko74
Note: IFM ITI
Number: 13846
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13846
File-URL: http://www.nber.org/papers/w13846.pdf
File-Format: application/pdf
Publication-Status: published as Robert Dekle & Jonathan Eaton & Samuel Kortum, 2008. "Global Rebalancing with Gravity: Measuring the Burden of Adjustment," IMF Staff Papers, Palgrave Macmillan Journals, vol. 55(3), pages 511-540, July.
Abstract: We use a forty-two country model of production and trade to assess the implications of eliminating current account imbalances for relative wages, relative GDP's, real wages, and real absorption. How much relative GDP's need to change depends on flexibility of two forms: factor mobility and the adjustment in sourcing of imports, with more flexibility requiring less change. At the extreme, US GDP falls by 30 percent relative to the world's. Because of the pervasiveness of nontraded goods, however, most domestic prices move in parallel with relative GDP, so that changes in real GDP are small.
Handle: RePEc:nbr:nberwo:13846
Template-Type: ReDIF-Paper 1.0
Title: Education and Labor Market Consequences of Teenage Childbearing: Evidence Using the Timing of Pregnancy Outcomes and Community Fixed Effects
Classification-JEL: J13; J24
Author-Name: Jason M. Fletcher
Author-Name: Barbara L. Wolfe
Author-Person: pwo47
Note: CH EH
Number: 13847
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13847
File-URL: http://www.nber.org/papers/w13847.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Fletcher & Barbara L. Wolfe, 2009. "Education and Labor Market Consequences of Teenage Childbearing: Evidence Using the Timing of Pregnancy Outcomes and Community Fixed Effects," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
Abstract: The question of whether giving birth as a teenager has negative economic consequences for the mother remains controversial despite substantial research. In this paper, we build upon existing literature, especially the literature that uses the experience of teenagers who had a miscarriage as the appropriate comparison group. We show that miscarriages are not random events, but rather are likely correlated with (unobserved) community-level factors, casting some doubt on previous findings. Including community-level fixed effects in our specifications lead to important changes in our estimates. By making use of information on the timing of miscarriages as well as birth control choices preceding the teenage pregnancies we construct more relevant control groups for teenage mothers. We find evidence that teenage childbearing likely reduces the probability of receiving a high school diploma by 5 to 10 percentage points, reduces annual income as a young adult by $1,000 to $2,400, and may increase the probability of receiving cash assistance and decrease years of schooling.
Handle: RePEc:nbr:nberwo:13847
Template-Type: ReDIF-Paper 1.0
Title: Arbitrage-free Limit Order Books and the Pricing of Order Flow Risk
Classification-JEL: G1; G12; G13
Author-Name: Bruce Lehmann
Note: AP
Number: 13848
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13848
File-URL: http://www.nber.org/papers/w13848.pdf
File-Format: application/pdf
Abstract: This paper builds on the landmark contribution of Glosten (1994) by treating the determination of limit order supply schedules as an exercise in asset pricing theory with the possible sizes of incoming market orders as the value-relevant states of nature, yielding an analogue of the Fundamental Theorem of Asset Pricing. State prices and price impact prove to be proportional to the slope of the book and simple nonparametric and semiparametric models for limit order book dynamics arise when the price of order flow risk is constant over time, providing a comprehensive and coherent framework for organizing limit order book data.
Handle: RePEc:nbr:nberwo:13848
Template-Type: ReDIF-Paper 1.0
Title: The Higher Educational Transformation of China and Its Global Implications
Classification-JEL: I2; I23
Author-Name: Yao Amber Li
Author-Person: pli361
Author-Name: John Whalley
Author-Person: pwh8
Author-Name: Shunming Zhang
Author-Name: Xiliang Zhao
Author-Person: pzh196
Note: ED
Number: 13849
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13849
File-URL: http://www.nber.org/papers/w13849.pdf
File-Format: application/pdf
Publication-Status: published as Yao Amber Li & John Whalley & Shunming Zhang & Xiliang Zhao, 2011. "The Higher Educational Transformation of China and Its Global Implications," The World Economy, Wiley Blackwell, vol. 34(4), pages 516-545, 04.
Abstract: This paper documents the major transformation of higher education that has been underway in China since 1999 and evaluates its potential global impacts. Reflecting China's commitment to continued high growth through quality upgrading and the production of ideas and intellectual property as set out in both the 10th (2001-2005) and 11th (2006-2010) five-year plans, this transformation focuses on major new resource commitments to tertiary education and also embodies significant changes in organizational form. This focus on tertiary education differentiates the Chinese case from other countries who earlier at similar stages of development instead stressed primary and secondary education. The number of undergraduate and graduate students in China has been grown at approximately 30% per year since 1999, and the number of graduates at all levels of higher education in China has approximately quadrupled in the last 6 years. The size of entering classes of new students and total student enrollments have risen even faster, and have approximately quintupled. Prior to 1999 increases in these areas were much smaller. Much of the increased spending is focused on elite universities, and new academic contracts differ sharply from earlier ones with no tenure and annual publication quotas often used. All of these changes have already had large impacts on China's higher educational system and are beginning to be felt by the wider global educational structure. We suggest that even more major impacts will follow in the years to come and there are implications for global trade both directly in ideas, and in idea derived products. These changes, for now, seem relatively poorly documented in literature.
Handle: RePEc:nbr:nberwo:13849
Template-Type: ReDIF-Paper 1.0
Title: Helping Workers Online and Offline: Innovations in Union and Worker Organization Using the Internet
Classification-JEL: J0; J3; J40; J5; J51; J52; J81; J83
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: M. Marit Rehavi
Author-Person: pre521
Note: LS
Number: 13850
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13850
File-URL: http://www.nber.org/papers/w13850.pdf
File-Format: application/pdf
Publication-Status: published as Helping Workers Online and Offline: Innovations in Union and Worker Organization Using the Internet, Richard B. Freeman, M. Marit Rehavi. in Studies of Labor Market Intermediation , Autor. 2009
Abstract: This study examines two innovative efforts to provide union services to workers with the aid of low cost Internet communication: the AFL-CIO's Working America, a "community affiliate" that enrolled 2 million workers from 2004 to 2007 by canvassing them at their homes and over the Internet (www.workingamerica.org); and the UK'S Trade Union Congress's www.unionreps.org.uk, a discussion board for worker representatives to communicate about workplace issues. Working America demonstrates that workers without collective bargaining will join a union organization that communicates on-line and off-line and campaigns for worker interests in society. Unionreps.org shows that local worker representatives can form an on-line community that shares information to improve the services they give workers. Combining the two innovations could be a step toward a new "open source" union form that provides union services at low cost outside of collective bargaining.
Handle: RePEc:nbr:nberwo:13850
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Impact of Immigration in Western Germany in the 1990's
Classification-JEL: E24; F22; J31; J61
Author-Name: Francesco D'Amuri
Author-Name: Gianmarco I.P. Ottaviano
Author-Person: pot15
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 13851
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13851
File-URL: http://www.nber.org/papers/w13851.pdf
File-Format: application/pdf
Publication-Status: published as D'Amuri, Francesco & Ottaviano, Gianmarco I.P. & Peri, Giovanni, 2010. "The labor market impact of immigration in Western Germany in the 1990s," European Economic Review, Elsevier, vol. 54(4), pages 550-570, May.
Abstract: We adopt a general equilibrium approach in order to measure the effects of recent immigration on the Western German labor market, looking at both wage and employment effects. Using the Regional File of the IAB Employment Subsample for the period 1987-2001, we find that the substantial immigration of the 1990's had no adverse effects on native wages and employment levels. It had instead adverse employment and wage effects on previous waves of immigrants. This stems from the fact that, after controlling for education and experience levels, native and migrant workers appear to be imperfect substitutes whereas new and old immigrants exhibit perfect substitutability. Our analysis suggests that if the German labor market were as 'flexible' as the UK labor market, it would be more efficient in dealing with the effects of immigration.
Handle: RePEc:nbr:nberwo:13851
Template-Type: ReDIF-Paper 1.0
Title: Coercion, Culture and Debt Contracts: The Henequen Industry in Yucatan, Mexico, 1870-1915
Classification-JEL: J33; N16; N36; N56; O54; Q15
Author-Name: Lee Alston
Author-Person: pal162
Author-Name: Shannan Mattiace
Author-Name: Tomas Nonnenmacher
Note: DAE
Number: 13852
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13852
File-URL: http://www.nber.org/papers/w13852.pdf
File-Format: application/pdf
Publication-Status: published as Alston, Lee J. & Mattiace, Shannan & Nonnenmacher, Tomas, 2009. "Coercion, Culture, and Contracts: Labor and Debt on Henequen Haciendas in Yucat?n, Mexico, 1870?1915," The Journal of Economic History, Cambridge University Press, vol. 69(01), pages 104-137, March.
Abstract: While most contemporary historians agree that the use of debt peonage as a coercive labor contract in Mexico was not widespread, scholars still concur that it was important and pervasive in Yucatan state during the henequen boom of the late 19th and early 20th centuries. The henequen boom concurred with the long rule of Porfirio Díaz (1876-1910), under whose watch property rights were reallocated through land laws, and Mexico's economy became much more closely tied to the United States. In the Yucatan, the accumulation of debts by peons rose as hacendados sought to attract and bond workers to match the rising U.S. demand for twine. We examine the institutional setting in which debt operated and analyze the specific functions of debt: who got it, what form it took, and why it varied across workers. We stress the formal and informal institutional contexts within which hacendados and workers negotiated contracts.
Handle: RePEc:nbr:nberwo:13852
Template-Type: ReDIF-Paper 1.0
Title: The Real Exchange Rate, Mercantilism and the Learning by Doing Externality
Classification-JEL: F13; F15; F31; F43
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Jaewoo Lee
Author-Person: ple103
Note: ITI
Number: 13853
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13853
File-URL: http://www.nber.org/papers/w13853.pdf
File-Format: application/pdf
Publication-Status: published as REAL EXCHANGE RATE, MERCANTILISM AND THE LEARNING BY DOING EXTERNALITY Joshua Aizenman1, Jaewoo Lee2,* Article first published online: 16 JUL 2010 DOI: 10.1111/j.1468-0106.2010.00505.x © 2010 The Authors. Journal compilation © 2010 Blackwell Publishing Asia Pty Ltd Issue Pacific Economic Review Pacific Economic Review Volume 15, Issue 3, pages 324–335, August 2010
Abstract: This paper examines the degree to which the learning by doing externality [LBD] calls for an undervalued exchange rate, a policy suggested by recent empirical studies which concluded that mildly undervalued real exchange rate may enhance growth. We obtain mixed results. For an economy where LBD externality operates in the traded sector, real exchange rate undervaluation may be used in order to internalize this externality, if the LBD calls for subsidizing employment in the traded sector. Yet, we also find that these results are not robust to changes in the nature of the LBD externality. If the LBD externality is embodied in aggregate investment, the optimal policy calls for subsidizing the cost of capital in the traded sector, and there is no room for undervalued exchange rate policy. In addition, a deliberate undervaluation by means of hoarding reserves may backfire if the needed sterilization would increase the cost of investment in the traded sector.
Handle: RePEc:nbr:nberwo:13853
Template-Type: ReDIF-Paper 1.0
Title: Consumption and Portfolio Choice with Option-Implied State Prices
Classification-JEL: G11; G13
Author-Name: Yacine Aït-Sahalia
Author-Person: pai23
Author-Name: Michael W. Brandt
Note: AP EFG
Number: 13854
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13854
File-URL: http://www.nber.org/papers/w13854.pdf
File-Format: application/pdf
Abstract: We propose an empirical implementation of the consumption-investment problem using the martingale representation alternative to dynamic programming. Our method is based on the direct observation of state prices from options data. This greatly simplifies the investor's task of specifying the investment opportunity set and inherits the computational convenience of the martingale representation. Our method also makes explicit the economic trade-off between exploiting differences in state prices and probabilities, which generate variation in consumption, and the consumption smoothing induced by risk aversion. Using options-implied information, we find quantitatively different optimal consumption and portfolio policies than those implied by standard return dynamics.
Handle: RePEc:nbr:nberwo:13854
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia
Classification-JEL: H2; J3
Author-Name: Adriana Kugler
Author-Person: pku361
Author-Name: Maurice Kugler
Author-Person: pku86
Note: LS PE
Number: 13855
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13855
File-URL: http://www.nber.org/papers/w13855.pdf
File-Format: application/pdf
Publication-Status: published as Adriana Kugler & Maurice Kugler, 2009. "Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 335-358, 01.
Abstract: We use a panel of manufacturing plants from Colombia to analyze how the rise in payroll tax rates over the 1980s and 1990s affected the labor market. Our estimates indicate that formal wages fall by between 1.4% and 2.3% as a result of a 10% rise in payroll taxes. This "less-than-full-shifting" is likely to be the result of weak linkages between benefits and taxes and the presence of downward wage rigidities in Colombia. Because the costs of taxation are only partly shifted from employers to employees, employment also falls. Our results indicate that a 10% increase in payroll taxes lowered formal employment by between 4% and 5%. In addition, we find some evidence of less shifting and larger disemployment effects for production than for non-production workers. These results suggest that policies aimed at boosting the relative demand of less-skill workers by reducing social security taxes may be effective in Latin American countries, where minimum wages bind and benefits are often not directly linked to contributions.
Handle: RePEc:nbr:nberwo:13855
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of a Legal Rule
Classification-JEL: K13; K41
Author-Name: Anthony Niblett
Author-Name: Richard Posner
Author-Person: ppo25
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: LE
Number: 13856
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13856
File-URL: http://www.nber.org/papers/w13856.pdf
File-Format: application/pdf
Publication-Status: published as Anthony Niblett & Richard A. Posner & Andrei Shleifer, 2010. "The Evolution of a Legal Rule," The Journal of Legal Studies, University of Chicago Press, vol. 39(2), pages 325 - 358.
Abstract: The efficiency of common law rules is central to achieving efficient resource allocation in a market economy. While many theories suggest reasons why judge-made law should tend toward efficient rules, the question whether the common law actually does converge in commercial areas has remained empirically untested. We create a dataset of 465 state-court appellate decisions involving the application of the Economic Loss Rule in construction disputes and track the evolution of law in this area from 1970 to 2005. We find that over this period the law did not converge to any stable resting point and evolved differently in different states. We find that legal evolution is influenced by plaintiffs' claims, the relative economic power of the parties, and nonbinding federal precedent.
Handle: RePEc:nbr:nberwo:13856
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Medicare Part D on Pharmaceutical R&D
Classification-JEL: H51; I18; O30
Author-Name: Margaret E. Blume-Kohout
Author-Person: pbl113
Author-Name: Neeraj Sood
Author-Person: pso62
Note: EH PR
Number: 13857
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13857
File-URL: http://www.nber.org/papers/w13857.pdf
File-Format: application/pdf
Abstract: Recent evidence suggests that Medicare Part D has increased prescription drug use among the elderly, and earlier studies have indicated that increasing market size induces pharmaceutical innovation. This paper assesses the impact of Medicare Part D on pharmaceutical research and development (R&D), using time-series data on (a) the number of drugs in clinical development by therapeutic class, and (b) R&D expenditures by firm. We demonstrate that the passage of Medicare Part D was associated with significantly higher pharmaceutical R&D for drug classes with higher Medicare market share, and for firms specializing in higher-Medicare-share drugs.
Handle: RePEc:nbr:nberwo:13857
Template-Type: ReDIF-Paper 1.0
Title: Dividend Taxation and Intertemporal Tax Arbitrage
Classification-JEL: G35; G38; H32
Author-Name: Anton Korinek
Author-Person: pko142
Author-Name: Joseph E. Stiglitz
Note: PE POL
Number: 13858
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13858
File-URL: http://www.nber.org/papers/w13858.pdf
File-Format: application/pdf
Publication-Status: published as Korinek, Anton & Stiglitz, Joseph E., 2009. "Dividend taxation and intertemporal tax arbitrage," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 142-159, February.
Abstract: We analyze the effects of changes in dividend tax policy using a life-cycle model of the firm, in which new firms first access equity markets, then grow internally, and finally pay dividends when they have reached steady state. In accordance with the traditional view of dividend taxation, new firms raise less equity and invest less the higher the level of dividend taxes. However, as postulated by the new view of dividend taxation, the dividend tax rate is irrelevant for the investment decisions of internally growing and mature firms. Since aggregate investment is dominated by these latter two categories, the level of dividend taxation as well as unanticipated changes in tax rates have only small effects on aggregate investment. Anticipated dividend tax changes, on the other hand, allow firms to engage in inter-temporal tax arbitrage so as to reduce investors' tax burden. This can significantly distort aggregate investment. Anticipated tax cuts (increases) delay (accelerate) firms' dividend payments, which leads them to hold higher (lower) cash balances and, for capital constrained firms, can significantly increase (decrease) aggregate investment for periods after the tax change. The analysis of dividend taxation in a contestable democracy thus has to take into account future policy changes as well as expectations thereof. This can significantly alter the evaluation of any given dividend tax policy.
Handle: RePEc:nbr:nberwo:13858
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Mergers on Consumer Prices: Evidence from Five Selected Case Studies
Classification-JEL: L1; L41; L66; L71; L73
Author-Name: Orley Ashenfelter
Author-Person: pas9
Author-Name: Daniel Hosken
Note: LE ME PE IO
Number: 13859
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13859
File-URL: http://www.nber.org/papers/w13859.pdf
File-Format: application/pdf
Publication-Status: published as The Effect of Mergers on Consumer Prices: Evidence from Five Mergers on the Enforcement Margin Orley Ashenfelter and Daniel Hosken Journal of Law and Economics Vol. 53, No. 3 (August 2010), pp. 417-466 Published by: The University of Chicago Press
Abstract: In this paper we propose a method to evaluate the effectiveness of U.S. horizontal merger policy and apply it to the study of five recent consumer product mergers. We selected the mergers from those that, from the public record, seemed to be most problematic for the antitrust agencies. Thus we estimate an upper bound on the likely price effect of completed mergers. Our study employs retail scanner data and uses familiar panel data program evaluation procedures to measure price changes. Our results indicate that four of the five mergers resulted in some increases in consumer prices, while the fifth merger had little effect.
Handle: RePEc:nbr:nberwo:13859
Template-Type: ReDIF-Paper 1.0
Title: Trade Growth, Production Fragmentation, and China's Environment
Classification-JEL: F1; F14; F18; F2
Author-Name: Judith M. Dean
Author-Person: pde634
Author-Name: Mary E. Lovely
Author-Person: plo347
Note: ITI
Number: 13860
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13860
File-URL: http://www.nber.org/papers/w13860.pdf
File-Format: application/pdf
Publication-Status: published as Trade Growth, Production Fragmentation, and China's Environment, Judith M. Dean, Mary E. Lovely. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: Trade growth for a relatively poor country is thought to shift the composition of industrial output towards dirtier products, aggravating environmental damage. China's rapidly growing trade and serious environmental degradation appear to be no exception. However, much of China's trade growth is attributable to the international fragmentation of production. This kind of trade could be cleaner, if fragmented production occurs in cleaner goods, or if China specializes in cleaner stages of production within these goods. Using Chinese official environmental data on air and water pollution, and official trade data, we present evidence that (1) China's industrial output has become cleaner over time, (2) China's exports have shifted toward relatively cleaner, highly fragmented sectors, and (3) the pollution intensity of Chinese exports has fallen dramatically between 1995 and 2004. We then explore the role of fragmentation and FDI in this trend toward cleaner trade. Beginning with a standard model of the pollution intensity of trade, we develop a model that explicitly introduces production fragmentation into the export sector. We then estimate this model using pooled data on four pollutants over ten years. Econometric results support the view that increased FDI and production fragmentation have contributed positively to the decline in the pollution intensity of China's trade, as has accession to the WTO and lower tariff rates.
Handle: RePEc:nbr:nberwo:13860
Template-Type: ReDIF-Paper 1.0
Title: A Solution to the Disconnect between Country Risk and Business Cycle Theories
Classification-JEL: E32; E44; F32; F34
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Vivian Z. Yue
Author-Person: pyu120
Note: IFM
Number: 13861
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13861
File-URL: http://www.nber.org/papers/w13861.pdf
File-Format: application/pdf
Abstract: We propose a model that solves the crucial disconnect between business cycle models that treat default risk as an exogenous interest rate on working capital, and sovereign default models that treat output fluctuations as an exogenous process with ad-hoc default costs. The model explains observed output dynamics around defaults, countercyclical spreads, high debt ratios, and key business cycle moments. Three features of the model are central for these results: working capital loans pay for imported inputs; default triggers an efficiency loss as imported inputs are replaced by imperfect domestic substitutes; and default on public and private foreign obligations occurs simultaneously.
Handle: RePEc:nbr:nberwo:13861
Template-Type: ReDIF-Paper 1.0
Title: Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation
Classification-JEL: I1; L31; O33
Author-Name: Jay Bhattacharya
Author-Name: Mikko Packalen
Author-Person: ppa648
Note: EH
Number: 13862
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13862
File-URL: http://www.nber.org/papers/w13862.pdf
File-Format: application/pdf
Abstract: This paper examines whether the composition of medical research responds to changes in disease incidence and research opportunities. The paper also provides new evidence on induced pharmaceutical innovation. In both cases we use the change in the demographic structure of the market (measured by age structure and obesity prevalence) to test the induced innovation hypothesis. Technological opportunity is calculated from estimates of structural productivity parameters. The extent of inventive activity is measured from the MEDLINE database on 16 million biomedical publications. We match these data with data on disease incidence. We show that medical research responds to changes in disease incidence and research opportunities. We also find that pharmaceutical innovation responds to aging- and obesity-induced changes in potential market size.
Handle: RePEc:nbr:nberwo:13862
Template-Type: ReDIF-Paper 1.0
Title: The Other Ex-Ante Moral Hazard in Health
Classification-JEL: I1; O3
Author-Name: Jay Bhattacharya
Author-Name: Mikko Packalen
Author-Person: ppa648
Note: EH
Number: 13863
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13863
File-URL: http://www.nber.org/papers/w13863.pdf
File-Format: application/pdf
Publication-Status: published as Bhattacharya, Jay & Packalen, Mikko, 2012. "The other ex ante moral hazard in health," Journal of Health Economics, Elsevier, vol. 31(1), pages 135-146.
Abstract: It is well known that public or pooled insurance coverage can induce a form of ex-ante moral hazard: people make inefficiently low investments in self-protective activities. This paper points out another ex-ante moral hazard that arises through an induced innovation externality. This alternative mechanism, by contrast, causes people to devote an inefficiently high level of self-protection. As an empirical example of this externality, we analyze the innovation induced by the obesity epidemic. Obesity is associated with an increase in the incidence of many diseases. The induced innovation hypothesis is that an increase in the incidence of a disease will increase technological innovation specific to that disease. The empirical economics literature has produced substantial evidence in favor of the induced innovation hypothesis. We first estimate the associations between obesity and disease incidence. We then show that if these associations are causal and the pharmaceutical reward system is optimal the magnitude of the induced innovation externality of obesity roughly coincides with the Medicare-induced health insurance externality of obesity. The current Medicare subsidy for obesity therefore appears to be approximately optimal. We also show that the pattern of diseases for obese and normal weight individuals are similar enough that the induced innovation externality of obesity on normal weight individuals is positive as well.
Handle: RePEc:nbr:nberwo:13863
Template-Type: ReDIF-Paper 1.0
Title: Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions
Classification-JEL: L10; L12
Author-Name: Thomas J. Holmes
Author-Person: pho45
Author-Name: David K. Levine
Author-Person: ple26
Author-Name: James A. Schmitz, Jr.
Author-Person: psc70
Note: PR
Number: 13864
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13864
File-URL: http://www.nber.org/papers/w13864.pdf
File-Format: application/pdf
Publication-Status: published as Holmes, Thomas J., David K. Levine, and James A. Schmitz. 2012. "Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions." American Economic Journal: Microeconomics, 4(3): 1-33. DOI: 10.1257/mic.4.3.1
Abstract: When considering the incentive of a monopolist to adopt an innovation, the textbook model assumes that it can instantaneously and seamlessly introduce the new technology. In fact, firms often face major problems in integrating new technologies. In some cases, firms have to (temporarily) produce at levels substantially below capacity upon adoption. We call such phenomena switchover disruptions, and present extensive evidence on them. If firms face switchover disruptions, then they may temporarily lose some unit sales upon adoption. If the firm loses unit sales, then a cost of adoption is the foregone rents on the sales of those units. Hence, greater market power will mean higher prices on those lost units of output, and hence a reduced incentive to innovate. We introduce switchover disruptions into some standard models in the literature, show they can overturn some famous results, and then show they can help explain evidence that firms in more competitive environments are more likely to adopt technologies and increase productivity.
Handle: RePEc:nbr:nberwo:13864
Template-Type: ReDIF-Paper 1.0
Title: On Inferring Demand for Health Care in the Presence of Anchoring, Acquiescence, and Selection Biases
Classification-JEL: C42; C81; C9; I1
Author-Name: Jay Bhattacharya
Author-Name: Adam Isen
Note: EH
Number: 13865
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13865
File-URL: http://www.nber.org/papers/w13865.pdf
File-Format: application/pdf
Publication-Status: published as Jay Bhattacharya & Adam Isen, 2009. "On Inferring Demand for Health Care in the Presence of Anchoring and Selection Biases," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 12(2).
Abstract: In the contingent valuation literature, both anchoring and acquiescence biases pose problems when using an iterative bidding game to infer willingness to pay. Anchoring bias occurs when the willingness to pay estimate is sensitive to the initially presented starting value. Acquiescence bias occurs when survey respondents exhibit a tendency to answer 'yes' to questions, regardless of their true preferences. More generally, whenever a survey format is used and not all of those contacted participate, selection bias raises concerns about the representativeness of the sample. In this paper, we estimate students' willingness to pay for student health care at Stanford University while accounting for all of these biases. As there is no cost sharing for students, we assess willingness to pay by having a random sample of students play an online iterative bidding game. Our main results are that (1) demand for student health care is elastic by conventional standards; (2) ignoring anchoring bias would lead to a substantially biased measure of the demand elasticity; (3) there is evidence for acquiescence bias in student answers to the opening question of the iterative bidding game and failure to address this leads to the biased conclusion that demand is inelastic; and (4) standard selection correction methods indicate no bias from selective non-response and newer bounding methods support this conclusion of elastic demand.
Handle: RePEc:nbr:nberwo:13865
Template-Type: ReDIF-Paper 1.0
Title: Investment and Value: A Neoclassical Benchmark
Classification-JEL: E22
Author-Name: Janice Eberly
Author-Person: peb3
Author-Name: Sergio Rebelo
Author-Name: Nicolas Vincent
Author-Person: pvi316
Note: EFG
Number: 13866
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13866
File-URL: http://www.nber.org/papers/w13866.pdf
File-Format: application/pdf
Abstract: Which investment model best fits firm-level data? To answer this question we estimate alternative models using Compustat data. Surprisingly, the two best-performing specifications are based on Hayashi's (1982) model. This model's foremost implication, that Q is a sufficient statistic for determining a firm's investment decision, has been often rejected because cash-flow and lagged-investment effects are present in investment regressions. However, we find that these regression results are quite fragile and ineffectual for evaluating model performance. So, forget what investment regressions tell you. Models based on Hayashi (1982) provide a very good description of investment behavior at the firm level.
Handle: RePEc:nbr:nberwo:13866
Template-Type: ReDIF-Paper 1.0
Title: Employer-to-Employer Flows in the United States: Estimates Using Linked Employer-Employee Data
Classification-JEL: E24; J62; J63
Author-Name: Melissa Bjelland
Author-Name: Bruce Fallick
Author-Person: pfa146
Author-Name: John Haltiwanger
Author-Person: pha231
Author-Name: Erika McEntarfer
Author-Person: pmc155
Note: EFG LS
Number: 13867
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13867
File-URL: http://www.nber.org/papers/w13867.pdf
File-Format: application/pdf
Publication-Status: published as Bjelland, Melissa & Fallick, Bruce & Haltiwanger, John & McEntarfer, Erika, 2011. "Employer-to-Employer Flows in the United States: Estimates Using Linked Employer-Employee Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(4), pages 493-505.
Abstract: We use administrative data linking workers and firms to study employer-to-employer flows. After discussing how to identify such flows in quarterly data, we investigate their basic empirical patterns. We find that the pace of employer-to-employer flows is high, representing about 4 percent of employment and 30 percent of separations each quarter. The pace of employer-to-employer flows is highly procyclical, and varies systematically across worker, job and employer characteristics. Our findings regarding job tenure and earnings dynamics suggest that for those workers moving directly to new jobs, the new jobs are generally better jobs; however, this pattern is highly procyclical. There are rich patterns in terms of origin and destination of industries. We find somewhat surprisingly that more than half of the workers making employer-to-employer transitions switch even broadly-defined industries (NAICS super-sectors).
Handle: RePEc:nbr:nberwo:13867
Template-Type: ReDIF-Paper 1.0
Title: Does Mentoring Reduce Turnover and Improve Skills of New Employees? Evidence from Teachers in New York City
Classification-JEL: I2; J24; J63
Author-Name: Jonah E. Rockoff
Note: ED LS
Number: 13868
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13868
File-URL: http://www.nber.org/papers/w13868.pdf
File-Format: application/pdf
Abstract: Mentoring has become an extremely popular policy for improving the retention and performance of new teachers, but we know little about its effects on teacher and student outcomes. I study the impact of mentoring in New York City, which adopted a nationally recognized mentoring program in 2004. I use detailed program data to examine the relationship between teacher and student outcomes and measures of mentoring quality, such as hours of mentoring received and the characteristics of mentors. Although assignment of teachers to mentors was non-random, I use instrumental variables and school fixed effects to address potential sources of bias. I find strong relationships between measures of mentoring quality and teachers' claims regarding the impact of mentors on their success in the classroom, but weaker evidence of effects on teacher absences, retention, and student achievement. The most consistent finding is that retention within a particular school is higher when a mentor has previous experience working in that school, suggesting that an important part of mentoring may be the provision of school specific knowledge. I also find evidence that student achievement in both reading and math were higher among teachers that received more hours of mentoring, supporting the notion that time spent working with a mentor does improve teaching skills.
Handle: RePEc:nbr:nberwo:13868
Template-Type: ReDIF-Paper 1.0
Title: Economies of Scale in the Household: Puzzles and Patterns from the American Past
Classification-JEL: D1; I3; J1; N3
Author-Name: Trevon D. Logan
Author-Person: plo110
Note: DAE
Number: 13869
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13869
File-URL: http://www.nber.org/papers/w13869.pdf
File-Format: application/pdf
Publication-Status: published as Trevon D. Logan, 2011. "Economies Of Scale In The Household: Puzzles And Patterns From The American Past," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 1008-1028, October.
Abstract: Household economies of scale arise when households with multiple members share public goods, making larger households better off at lower per capita expenditures. While estimates of household economies of scale are critical for measuring income and living standards, we do not know how these scale economies change over time. I use American household expenditure surveys to produce the first comparable historical estimates of household scale economies. I find that scale economies changed significantly from 1888 to 1935 for all expenditure categories considered (food, clothing, entertainment, and housing), but not all trends in scale economies are consistent with theoretical predictions. I use these historical estimates of household scale economies to resolve several theoretical and empirical puzzles in the literature. I find that existing explanations for puzzles in the household economies of scale literature do not hold in the past. As such, our notions about household economies of scale must be reassessed in light of this historical evidence.
Handle: RePEc:nbr:nberwo:13869
Template-Type: ReDIF-Paper 1.0
Title: Are Engel Curve Estimates of CPI Bias Biased?
Classification-JEL: D1; E3; J1; N3
Author-Name: Trevon D. Logan
Author-Person: plo110
Note: DAE EFG
Number: 13870
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13870
File-URL: http://www.nber.org/papers/w13870.pdf
File-Format: application/pdf
Publication-Status: published as Trevon D. Logan, 2009. "Are Engel Curve Estimates of CPI Bias Biased?," Historical Methods: A Journal of Quantitative and Interdisciplinary History, vol 42(3), pages 97-110.
Abstract: A recent literature has advanced the use of Engel curves to estimate overall CPI bias. In this paper, I show that the methodology is sensitive to the modeling of household demography. Existing estimates of CPI bias do not account for the changing effect of household size on budget shares, and this can lead to omitted variable bias. Since the effect of household size on demand changes over time the drift in Engel curves attributed to CPI bias is partially explained by this effect. My estimates of the annual rate of CPI bias from 1888 to 1935 are changed by at least 25%, and usually more than 50%, once the changing effect of household size is accounted for.
Handle: RePEc:nbr:nberwo:13870
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Implications of Indivisible Labor, Incomplete Markets, and Labor Market Frictions
Classification-JEL: E2; J2
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Toshihiko Mukoyama
Author-Person: pmu40
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Aysegul Sahin
Author-Person: psa123
Note: EFG
Number: 13871
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13871
File-URL: http://www.nber.org/papers/w13871.pdf
File-Format: application/pdf
Publication-Status: published as Krusell, Per & Mukoyama, Toshihiko & Rogerson, Richard & Sahin, Aysegül, 2008. "Aggregate implications of indivisible labor, incomplete markets, and labor market frictions," Journal of Monetary Economics, Elsevier, vol. 55(5), pages 961-979, July.
Abstract: This paper analyzes a model that features frictions, an operative labor supply margin, and incomplete markets. We first provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions. We show that the steady state levels of aggregate hours and aggregate capital stock are identical to those obtained in the economy with employment lotteries, while individual employment and asset dynamics can be different. Second, we introduce labor market frictions to the benchmark model. We find that the effect of the frictions on the response of aggregate hours to a permanent tax change is highly non-linear. We also find that there is considerable scope for substitution between "voluntary" and "frictional" nonemployment in some situations.
Handle: RePEc:nbr:nberwo:13871
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Fluctuations in the Small and in the Large
Classification-JEL: E2; E3; J2; J6
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Lodewijk P. Visschers
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG
Number: 13872
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13872
File-URL: http://www.nber.org/papers/w13872.pdf
File-Format: application/pdf
Publication-Status: published as Richard Rogerson & Lodewijk P. Visschers & Randall Wright, 2009. "Labor market fluctuations in the small and in the large," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 125-137.
Abstract: Shimer's calibrated version of the Mortensen-Pissarides model generates unemployment fluctuates much smaller than the data. Hagedorn and Manovskii present an alternative calibration that yields fluctuations consistent with the data, but this has been challenged by Costain and Reiter, who say it generates unrealistically big differences in unemployment from the differences in policy we sees across countries. We argue this concern may be unwarranted, because one cannot assume elasticities relevant for small changes work for large changes. Models with fixed factors in market or household production can generate large effects from small changes and reasonable effects from large changes. This is reminiscent of attempts to improve the labor market in the Kydland-Prescott model, especially ones incorporating household production, like Benhabib, Rogerson and Wright.
Handle: RePEc:nbr:nberwo:13872
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Study of the Credit Market with Unobserved Consumer Typers
Classification-JEL: C81; D12
Author-Name: Li Gan
Author-Person: pga94
Author-Name: Roberto Mosquera
Note: IO
Number: 13873
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13873
File-URL: http://www.nber.org/papers/w13873.pdf
File-Format: application/pdf
Abstract: This paper proposes an econometric model to identify unobserved consumer types in the credit market. Consumers choose different amounts of loan because of differences in their time or risk preferences (types). Thus, the unconditional probability of default is modeled using a mixture density combining a type-conditioning default variable with a type-determining random variable. The model is estimated using individual-level consumer credit card information. The parameter estimates and statistical tests support this kind of specification. Furthermore, the model produces better out-of-sample predictions on the probability of default than traditional models; hence, it provides evidence of the existence of types in the consumer credit market.
Handle: RePEc:nbr:nberwo:13873
Template-Type: ReDIF-Paper 1.0
Title: Collateral Pricing
Classification-JEL: G12; G24; G32; G33; L93
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Note: AP CF
Number: 13874
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13874
File-URL: http://www.nber.org/papers/w13874.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim & Bergman, Nittai K., 2009. "Collateral pricing," Journal of Financial Economics, Elsevier, vol. 91(3), pages 339-360, March.
Abstract: We examine how collateral affects the cost of debt capital. Theories based on borrower moral hazard and limited pledgeable income predict that collateral increases the availability of credit and reduces its price. Testing these theories is complicated by the very selection problem which they imply: creditors will demand collateral precisely from those borrowers who are riskier. This selection problem leads to a positive relation in the data between the presence of collateral and the loan yield. Analyzing the extensive margin of collateral use, therefore, masks the hypothesized negative impact that collateral exhibits on debt yields. In this paper, we alleviate this problem by focusing on a particular industry and examining its intensive, rather than extensive, margin of collateral use. Using a novel data set of secured debt issued by U.S. airlines, we construct industry-specific measures of collateral redeployability. We show that debt tranches that are secured by more redeployable collateral exhibit lower credit spreads, higher credit ratings, and higher loan-to-value ratios -- an effect which our estimates show to be economically sizeable. Our results suggest that the ability to pledge collateral, and in particular redeployable collateral, lowers the cost of external financing and increases debt capacity.
Handle: RePEc:nbr:nberwo:13874
Template-Type: ReDIF-Paper 1.0
Title: Differences in Breast Cancer Diagnosis and Treatment:Experiences of Insured and Uninsured Patients in a Safety Net Setting
Classification-JEL: I18
Author-Name: Cathy J. Bradley
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Lisa M. Shickle
Author-Name: Nicholas Farrell
Note: EH
Number: 13875
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13875
File-URL: http://www.nber.org/papers/w13875.pdf
File-Format: application/pdf
Abstract: To explore how well the safety net performs at eliminating differences in diagnosis and treatment of insured and uninsured women with breast cancer, we compared insured and uninsured women treated in a safety net setting. Controlling for socioeconomic characteristics, uninsured women are more likely to be diagnosed with advanced disease, requiring more extensive treatment relative to insured women, and also experience delays in initiating and completing treatment. The findings suggest that, despite the safety net system, uninsured women with breast cancer are likely to require more costly treatment and to have worse outcomes, relative to insured women with breast cancer.
Handle: RePEc:nbr:nberwo:13875
Template-Type: ReDIF-Paper 1.0
Title: International Evidence on Sticky Consumption Growth
Classification-JEL: E21; F41
Author-Name: Christopher D. Carroll
Author-Person: pca45
Author-Name: Jiri Slacalek
Author-Name: Martin Sommer
Author-Person: pso41
Note: EFG IFM ME
Number: 13876
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13876
File-URL: http://www.nber.org/papers/w13876.pdf
File-Format: application/pdf
Publication-Status: published as Christopher D. Carroll & Jiri Slacalek & Martin Sommer, 2011. "International Evidence on Sticky Consumption Growth," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1135-1145, 06.
Abstract: We estimate the degree of 'stickiness' in aggregate consumption growth (sometimes interpreted as reflecting consumption habits) for thirteen advanced economies. We find that, after controlling for measurement error, consumption growth has a high degree of autocorrelation, with a stickiness parameter of about 0.7 on average across countries. The sticky-consumption-growth model outperforms the random walk model of Hall (1978), and typically fits the data better than the popular Campbell and Mankiw (1989) model. In several countries, the sticky-consumption-growth and Campbell-Mankiw models work about equally well.
Handle: RePEc:nbr:nberwo:13876
Template-Type: ReDIF-Paper 1.0
Title: After Midnight: A Regression Discontinuity Design in Length of Postpartum Hospital Stays
Classification-JEL: H51; I11; I12; J13
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Joseph J. Doyle, Jr.
Note: CH EH LS
Number: 13877
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13877
File-URL: http://www.nber.org/papers/w13877.pdf
File-Format: application/pdf
Publication-Status: published as Douglas Almond & Joseph J Doyle, 2011. "After Midnight: A Regression Discontinuity Design in Length of Postpartum Hospital Stays," American Economic Journal: Economic Policy, vol 3(3), pages 1-34.
Abstract: Patients who receive more hospital treatment tend to have worse underlying health, confounding estimates of the returns to such care. This paper compares the costs and benefits of extending the length of hospital stay following delivery using a discontinuity in stay length for infants born close to midnight. Third-party reimbursement rules in California entitle newborns to a minimum number of hospital "days," counted as the number of midnights in care. A newborn delivered at 12:05 a.m. will have an extra night of reimbursable care compared to an infant born minutes earlier. We use a dataset of all California births from 1991-2002, including nearly 100,000 births within 20 minutes of midnight, and find that children born just prior to midnight have significantly shorter lengths of stay than those born just after midnight, despite similar observable characteristics. Furthermore, a law change in 1997 entitled newborns to a minimum of 2 days in care. The midnight discontinuity can therefore be used to consider two distinct treatments: increasing stay length from one to two nights (prior to the law change) and from two to three nights (following the law change). On both margins, we find no effect of stay length on readmissions or mortality for either the infant or the mother, and the estimates are precise. The results suggest that for uncomplicated births, longer hospitals stays incur substantial costs without apparent health benefits.
Handle: RePEc:nbr:nberwo:13877
Template-Type: ReDIF-Paper 1.0
Title: Press Coverage and Political Accountability
Classification-JEL: D72; H5; L82
Author-Name: James M. Snyder, Jr.
Author-Person: psn39
Author-Name: David Strömberg
Author-Person: pst689
Note: POL
Number: 13878
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13878
File-URL: http://www.nber.org/papers/w13878.pdf
File-Format: application/pdf
Publication-Status: published as James M. Snyder & David Strömberg, 2010. "Press Coverage and Political Accountability," Journal of Political Economy, University of Chicago Press, vol. 118(2), pages 355-408, 04.
Abstract: In this paper we estimate the impact of press coverage on citizen knowledge, politicians' actions, and policy. We find that a poor fit between newspaper markets and political districts reduces press coverage of politics. We use variation in this fit due to redistricting to identify the effects of reduced coverage. Exploring the links in the causal chain of media effects -- voter information, politicians' actions and policy -- we find statistically significant and substantively important effects. Voters living in areas with less coverage of their U.S. House representative are less likely to recall their representative's name, and less able to describe and rate them. Congressmen who are less covered by the local press work less for their constituencies: they are less likely to stand witness before congressional hearings, to serve on constituency-oriented committees (perhaps), and to vote against the party line. Finally, this congressional behavior affects policy. Federal spending is lower in areas where there is less press coverage of the local members of congress.
Handle: RePEc:nbr:nberwo:13878
Template-Type: ReDIF-Paper 1.0
Title: The Economic Value of Teeth
Classification-JEL: I12; I18
Author-Name: Sherry Glied
Author-Name: Matthew Neidell
Author-Person: pne362
Note: EH LS
Number: 13879
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13879
File-URL: http://www.nber.org/papers/w13879.pdf
File-Format: application/pdf
Publication-Status: published as Glied, Sherry and Matthew Neidell. “The Economic Value of Teeth,” Journal of Human Resources, 45(2), 2010.
Abstract: Healthy teeth are a vital and visible component of general well-being, but there is little systematic evidence to demonstrate their economic value. In this paper, we examine one element of that value, the effect of oral health on labor market outcomes, by exploiting variation in access to fluoridated water during childhood. The politics surrounding the adoption of water fluoridation by local water districts suggests exposure to fluoride during childhood is exogenous to other factors affecting earnings. We find that women who resided in communities with fluoridated water during childhood earn approximately 4% more than women who did not, but we find no effect of fluoridation for men. Furthermore, the effect is almost exclusively concentrated amongst women from families of low socioeconomic status. We find little evidence to support occupational sorting, statistical discrimination, and productivity as potential channels of these effects, suggesting consumer and employer discrimination are the likely driving factors whereby oral health affects earnings
Handle: RePEc:nbr:nberwo:13879
Template-Type: ReDIF-Paper 1.0
Title: Capital Account Liberalization, Real Wages, and Productivity
Classification-JEL: E2; F3; F4; F41; J3; O4
Author-Name: Peter Blair Henry
Author-Person: phe166
Author-Name: Diego Sasson
Note: CF EFG IFM ITI LS
Number: 13880
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13880
File-URL: http://www.nber.org/papers/w13880.pdf
File-Format: application/pdf
Abstract: For three years after the typical developing country opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of seven. No such increase occurs in a control group of developing countries. The temporary increase in the growth rate of the real wage permanently drives up the level of average annual compensation for each worker in the sample by 752 US dollars -- an increase equal to more than a quarter of their annual pre-liberalization salary. The increase in the growth rate of labor productivity in the aftermath of liberalization exceeds the increase in the growth rate of the real wage so that the increase in workers' incomes actually coincides with a rise in manufacturing sector profitability.
Handle: RePEc:nbr:nberwo:13880
Template-Type: ReDIF-Paper 1.0
Title: Health Care Financing, Efficiency, and Equity
Classification-JEL: H42; H51; I18
Author-Name: Sherry A. Glied
Note: EH
Number: 13881
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13881
File-URL: http://www.nber.org/papers/w13881.pdf
File-Format: application/pdf
Abstract: This paper examines the efficiency and equity implications of alternative health care system financing strategies. Using data across the OECD, I find that almost all financing choices are compatible with efficiency in the delivery of health care, and that there has been no consistent and systematic relationship between financing and cost containment. Using data on expenditures and life expectancy by income quintile from the Canadian health care system, I find that universal, publicly-funded health insurance is modestly redistributive. Putting $1 of tax funds into the public health insurance system effectively channels between $0.23 and $0.26 toward the lowest income quintile people, and about $0.50 to the bottom two income quintiles. Finally, a review of the literature across the OECD suggests that the progressivity of financing of the health insurance system has limited implications for overall income inequality, particularly over time.
Handle: RePEc:nbr:nberwo:13881
Template-Type: ReDIF-Paper 1.0
Title: This Time is Different: A Panoramic View of Eight Centuries of Financial Crises
Classification-JEL: E6; F3; N0
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM
Number: 13882
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13882
File-URL: http://www.nber.org/papers/w13882.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
Abstract: This paper offers a "panoramic" analysis of the history of financial crises dating from England's fourteenth-century default to the current United States sub-prime financial crisis. Our study is based on a new dataset that spans all regions. It incorporates a number of important credit episodes seldom covered in the literature, including for example, defaults and restructurings in India and China. As the first paper employing this data, our aim is to illustrate some of the broad insights that can be gleaned from such a sweeping historical database. We find that serial default is a nearly universal phenomenon as countries struggle to transform themselves from emerging markets to advanced economies. Major default episodes are typically spaced some years (or decades) apart, creating an illusion that "this time is different" among policymakers and investors. A recent example of the "this time is different" syndrome is the false belief that domestic debt is a novel feature of the modern financial landscape. We also confirm that crises frequently emanate from the financial centers with transmission through interest rate shocks and commodity price collapses. Thus, the recent US sub-prime financial crisis is hardly unique. Our data also documents other crises that often accompany default: including inflation, exchange rate crashes, banking crises, and currency debasements.
Handle: RePEc:nbr:nberwo:13882
Template-Type: ReDIF-Paper 1.0
Title: Changes in the Characteristics of American Youth: Implications for Adult Outcomes
Classification-JEL: J01; J11; J15; J16; J31; J82
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Prashant Bharadwaj
Author-Name: Fabian Lange
Author-Person: pla224
Note: CH LS
Number: 13883
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13883
File-URL: http://www.nber.org/papers/w13883.pdf
File-Format: application/pdf
Publication-Status: published as Joseph G. Altonji & Prashant Bharadwaj & Fabian Lange, 2012. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 783 - 828.
Abstract: We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes
Handle: RePEc:nbr:nberwo:13883
Template-Type: ReDIF-Paper 1.0
Title: Taxes and Mutual Fund Inflows Around Distribution Dates
Classification-JEL: G11; G23; H24
Author-Name: Woodrow T. Johnson
Author-Person: pjo263
Author-Name: James M. Poterba
Author-Person: ppo19
Note: AP PE
Number: 13884
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13884
File-URL: http://www.nber.org/papers/w13884.pdf
File-Format: application/pdf
Abstract: Capital gain distributions by mutual funds generate tax liability for taxable shareholders, thereby reducing their after-tax returns. Taxable investors who are considering purchasing fund shares around distribution dates have an incentive to delay their purchase until after the distribution, since this will reduce the present value of their tax liability. Non-taxable shareholders, such as those who invest through IRAs and other tax-deferred accounts, face no such incentive for delaying purchase. This paper compares daily shareholder transactions by taxable and non-taxable investors in the mutual funds of a single no-load fund complex around distribution dates. Gross inflows to taxable accounts are significantly lower in the weeks preceding distribution dates than in the weeks following them, but gross inflows to tax-deferred accounts do not change around these dates. This finding suggests that some taxable shareholders time their purchase of mutual fund shares to avoid the tax acceleration associated with distributions. Taxable shareholders who purchase shares just before distribution dates also have shorter holding periods, on average, than those who buy after a distribution. The cost of the distribution-related tax acceleration for pre-distribution buyers is therefore somewhat less than that for those who buy after the distribution.
Handle: RePEc:nbr:nberwo:13884
Template-Type: ReDIF-Paper 1.0
Title: Universal Public Health Insurance and Private Coverage: Externalities in Health Care Consumption
Classification-JEL: H23; I18
Author-Name: Sherry A. Glied
Note: EH PE
Number: 13885
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13885
File-URL: http://www.nber.org/papers/w13885.pdf
File-Format: application/pdf
Publication-Status: published as Universal Public Health Insurance and Private Coverage: Externalities in Health Care Consumption Sherry Glied Canadian Public Policy / Analyse de Politiques , Vol. 34, No. 3 (Sep., 2008), pp. 345-357 Published by: University of Toronto Press on behalf of Canadian Public Policy
Abstract: Inequality in access to health care services, through private purchase, appears to pose policy challenges greater than inequality in other spheres. This paper explores how inequality in access to health care services relates to social welfare. I examine the sources of private demand for health insurance and the ramifications of this demand for health, for patterns for government spending on health care services, and for individual and social well-being. Finally, I evaluate the implications of a health tax as a response to the externalities of health service consumption, and provide a rough measure of the tax in the context of the Canadian publicly-financed health care system.
Handle: RePEc:nbr:nberwo:13885
Template-Type: ReDIF-Paper 1.0
Title: The Internet and Job Search
Classification-JEL: J01; J6; J62; J63
Author-Name: Betsey Stevenson
Author-Person: pst145
Note: LS
Number: 13886
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13886
File-URL: http://www.nber.org/papers/w13886.pdf
File-Format: application/pdf
Publication-Status: published as The Internet and Job Search, Betsey Stevenson. in Studies of Labor Market Intermediation , Autor. 2009
Abstract: This paper examines how the Internet has impacted job search behavior. Examining those who use the Internet for job seeking purposes, I show that the vast majority are currently employed. These employed job seekers are more likely to leave their current employer and are more likely to make an employment-to-employment transition. Examining the unemployed, I find that over the past ten years the variety of job search methods used by the unemployed has increased and job search behavior has become more extensive. Furthermore, the Internet has led to reallocation of effort among various job search activities.
Handle: RePEc:nbr:nberwo:13886
Template-Type: ReDIF-Paper 1.0
Title: Imperfect Substitution between Immigrants and Natives: A Reappraisal
Classification-JEL: J01; J61
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Jeffrey Grogger
Author-Person: pgr125
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI LS
Number: 13887
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13887
File-URL: http://www.nber.org/papers/w13887.pdf
File-Format: application/pdf
Abstract: In a recent paper, Ottaviano and Peri (2007a) report evidence that immigrant and native workers are not perfect substitutes within narrowly defined skill groups. The resulting complementarities have important policy implications because immigration may then raise the wage of many native-born workers. We examine the Ottaviano-Peri empirical exercise and show that their finding of imperfect substitution is fragile and depends on the way the sample of working persons is constructed. There is a great deal of heterogeneity in labor market attachment among workers and the finding of imperfect substitution disappears once the analysis adjusts for such heterogeneity. As an example, the finding of immigrant-native complementarity evaporates simply by removing high school students from the data (under the Ottaviano and Peri classification, currently enrolled high school juniors and seniors are included among high school dropouts, which substantially increases the counts of young low-skilled workers ). More generally, we cannot reject the hypothesis that comparably skilled immigrant and native workers are perfect substitutes once the empirical exercise uses standard methods to carefully construct the variables representing factor prices and factor supplies.
Handle: RePEc:nbr:nberwo:13887
Template-Type: ReDIF-Paper 1.0
Title: Do Markets Respond to Quality Information? The Case of Fertility Clinics
Classification-JEL: I11; I18; L15
Author-Name: M. Kate Bundorf
Author-Name: Natalie Chun
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Daniel P. Kessler
Note: EH
Number: 13888
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13888
File-URL: http://www.nber.org/papers/w13888.pdf
File-Format: application/pdf
Publication-Status: published as Bundorf, M. Kate & Chun, Natalie & Goda, Gopi Shah & Kessler, Daniel P., 2009. "Do markets respond to quality information? The case of fertility clinics," Journal of Health Economics, Elsevier, vol. 28(3), pages 718-727, May.
Abstract: Although policymakers have increasingly turned to provider report cards as a tool to improve health care quality, existing studies provide mixed evidence that they influence consumer choices. We examine the effects of providing consumers with quality information in the context of fertility clinics providing Assisted Reproductive Therapies (ART). We report three main findings. First, clinics with higher birthrates had larger market shares after relative to before the adoption of report cards. Second, clinics with a disproportionate share of young, relatively easy-to-treat patients had lower market shares after adoption versus before. This suggests that consumers take into account information on patient mix when evaluating clinic outcomes. Third, report cards had larger effects on consumers and clinics from states with ART insurance coverage mandates. We conclude that quality report cards have potential to influence provider behavior in this setting.
Handle: RePEc:nbr:nberwo:13888
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rate Pass-Through And Monetary Policy
Classification-JEL: E52; F41
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME IFM
Number: 13889
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13889
File-URL: http://www.nber.org/papers/w13889.pdf
File-Format: application/pdf
Publication-Status: published as Frederic S. Mishkin, 2008. "Exchange rate pass-through and monetary policy: a speech at the Norges Bank Conference on Monetary Policy, Oslo, Norway, March 7, 2008," Speech, Board of Governors of the Federal Reserve System (U.S.).
Abstract: This paper discusses what recent economic research tells us about exchange rate pass-through and what this suggests for the control of monetary policy. It first focuses on exchange rate pass-through from a macroeconomic perspective and then examines the microeconomic evidence. In light of this evidence, it then discusses the implications of exchange rate movements on the conduct of monetary policy.
Handle: RePEc:nbr:nberwo:13889
Template-Type: ReDIF-Paper 1.0
Title: Conditional Cash Transfers in Education Design Features, Peer and Sibling Effects Evidence from a Randomized Experiment in Colombia
Classification-JEL: I2; I38
Author-Name: Felipe Barrera-Osorio
Author-Person: pba426
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Leigh L. Linden
Author-Person: pli719
Author-Name: Francisco Perez-Calle
Author-Person: ppe823
Note: CH ED LS
Number: 13890
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13890
File-URL: http://www.nber.org/papers/w13890.pdf
File-Format: application/pdf
Abstract: We evaluate multiple variants of a commonly used intervention to boost education in developing countries -- the conditional cash transfer (CCT) -- with a student level randomization that allows us to generate intra-family and peer-network variation. We test three treatments: a basic CCT treatment based on school attendance, a savings treatment that postpones a bulk of the cash transfer due to good attendance to just before children have to reenroll, and a tertiary treatment where some of the transfers are conditional on students' graduation and tertiary enrollment rather than attendance. On average, the combined incentives increase attendance, pass rates, enrollment, graduation rates, and matriculation to tertiary institutions. Changing the timing of the payments does not change attendance rates relative to the basic treatment but does significantly increase enrollment rates at both the secondary and tertiary levels. Incentives for graduation and matriculation are particularly effective, increasing attendance and enrollment at secondary and tertiary levels more than the basic treatment. We find some evidence that the subsidies can cause a reallocation of responsibilities within the household. Siblings (particularly sisters) of treated students work more and attend school less than students in families that received no treatment. We also find that indirect peer influences are relatively strong in attendance decisions with the average magnitude similar to that of the direct effect.
Handle: RePEc:nbr:nberwo:13890
Template-Type: ReDIF-Paper 1.0
Title: The Life Cycle of Scholars and Papers in Economics -- the "Citation Death Tax"
Classification-JEL: B4; B54; C81; C92; L14
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Kenneth Kletzer
Note: ITI
Number: 13891
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13891
File-URL: http://www.nber.org/papers/w13891.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Kenneth Kletzer, 2011. "The life cycle of scholars and papers in economics - the 'citation death tax'," Applied Economics, Taylor and Francis Journals, vol. 43(27), pages 4135-4148.
Abstract: The information content of academic citations is subject to debate. This paper views premature death as a tragic "natural experiment," outlining a methodology identifying the "citation death tax" -- the impact of death of productive economists on the patterns of their citations. We rely on a sample of 428 papers written by 16 well known economists who died well before retirement, during the period of 1975- 97. The news is mixed: for half of the sample, we identify a large and significant "citation death tax" for the average paper written by these scholars. For these authors, the estimated average missing citations per paper attributed to premature death ranges from 40% to 140% (the overall average is about 90%), and the annual costs of lost citations per paper are in the range 3% and 14%. Hence, a paper written ten years before the author's death avoids a citation cost that varies between 30% and 140%. For the other half of the sample, there is no citation death tax; and for two Nobel Prize-caliber scholars in this second group, Black and Tversky, citations took off overtime, reflecting the growing recognitions of their seminal works.
Handle: RePEc:nbr:nberwo:13891
Template-Type: ReDIF-Paper 1.0
Title: Optimal Monetary Policy under Uncertainty in DSGE Models: A Markov Jump-Linear-Quadratic Approach
Classification-JEL: E42; E52; E58
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Author-Name: Noah Williams
Author-Person: pwi107
Note: EFG ME
Number: 13892
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13892
File-URL: http://www.nber.org/papers/w13892.pdf
File-Format: application/pdf
Publication-Status: published as Lars E.O. Svensson & Noah Williams, 2008. "Optimal monetary policy under uncertainty: a Markov jump-linear-quadratic approach," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 275-294.
Publication-Status: published as Lars E.O. Svensson & Noah Williams, 2009. "Optimal Monetary Policy under Uncertainty in DSGE Models: A Markov Jump-Linear-Quadratic Approach," Central Banking, Analysis, and Economic Policies Book Series, in: Klaus Schmidt-Hebbel & Carl E. Walsh & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy under Uncertainty and Learning, edition 1, volume 13, chapter 3, pages 077-114 Central Bank of Chile.
Abstract: We study the design of optimal monetary policy under uncertainty in a dynamic stochastic general equilibrium models. We use a Markov jump-linear-quadratic (MJLQ) approach to study policy design, approximating the uncertainty by different discrete modes in a Markov chain, and by taking mode-dependent linear-quadratic approximations of the underlying model. This allows us to apply a powerful methodology with convenient solution algorithms that we have developed. We apply our methods to a benchmark New Keynesian model, analyzing how policy is affected by uncertainty, and how learning and active experimentation affect policy and losses.
Handle: RePEc:nbr:nberwo:13892
Template-Type: ReDIF-Paper 1.0
Title: Deconstructing Lifecycle Expenditure
Classification-JEL: D13; E21
Author-Name: Mark Aguiar
Author-Person: pag57
Author-Name: Erik Hurst
Author-Person: phu87
Note: AG EFG LS
Number: 13893
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13893
File-URL: http://www.nber.org/papers/w13893.pdf
File-Format: application/pdf
Publication-Status: published as Deconstructing Life Cycle Expenditure Mark Aguiar and Erik Hurst Journal of Political Economy, 2013, vol. 121, issue 3, pages 437 - 492
Abstract: In this paper we revisit two well-known facts regarding lifecycle expenditures. The first is the familiar "hump" shaped lifecycle profile of nondurable expenditures. We document that the behavior of total nondurables masks surprising heterogeneity in the lifecycle profile of individual sub-components. We find, for example, that while food expenditures decline after middle age, expenditures on entertainment continue to increase throughout the lifecycle. These patterns pose a challenge to models that emphasize inter-temporal substitution or movements in income, including standard models of precautionary savings, myopia, and limited commitment, to explain the lifecycle profile of expenditures. Second, we document that the increase in the cross-sectional dispersion of expenditure over the lifecycle is not greater for luxuries. In particular, the dispersion in entertainment expenditure declines relative to food expenditures as households become older, casting further doubt on theories that emphasize (exclusively) shocks to permanent income to explain the rising cross sectional expenditure dispersion over the lifecycle. We propose and test a Beckerian model that emphasizes intra-temporal substitution between time and expenditures as the opportunity cost of time varies over the lifecycle. We find this alternative model successfully explains the joint behavior of food and entertainment expenditures in the latter half of the lifecycle. The model, however, is less successful in explaining expenditure patterns early in the lifecycle.
Handle: RePEc:nbr:nberwo:13893
Template-Type: ReDIF-Paper 1.0
Title: Persistent Private Information
Classification-JEL: D82; D86; E21
Author-Name: Noah Williams
Author-Person: pwi107
Note: EFG
Number: 13894
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13894
File-URL: http://www.nber.org/papers/w13894.pdf
File-Format: application/pdf
Publication-Status: published as Noah Williams, 2011. "Persistent Private Information," Econometrica, Econometric Society, vol. 79(4), pages 1233-1275, 07.
Abstract: This paper studies the design of optimal contracts in dynamic environments where agents have private information that is persistent. In particular, I focus on a continuous time version of a benchmark insurance problem where a risk averse agent would like to borrow from a risk neutral lender to stabilize his income stream. The income stream is private information to the borrower and is persistent. I find that the optimal contract conditions on the agent's reported endowment as well as two additional state variables: the agent's utility and marginal utility under the contract. I show how persistence alters the nature of the contract, and consider an exponential utility example which can be solved in closed form. Unlike the previous discrete time models with i.i.d. private information, the agent's consumption under the contract may grow over time. Furthermore, in my setting the efficiency losses due to private information increase with the persistence of the endowment, and the distortions vanish as I approximate an i.i.d. endowment.
Handle: RePEc:nbr:nberwo:13894
Template-Type: ReDIF-Paper 1.0
Title: Regulation and Supervision: An Ethical Perspective
Classification-JEL: G28
Author-Name: Edward J. Kane
Author-Person: pka853
Note: LE ME
Number: 13895
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13895
File-URL: http://www.nber.org/papers/w13895.pdf
File-Format: application/pdf
Publication-Status: published as Regulation and Supervision: An Ethical Perspective Edward J. Kane The Oxford Handbook of Banking Print Publication Date: Jan 2012 Subject: Economics and Finance, Financial Economics, Public Economics and Policy Online Publication Date: Sep 2012 DOI: 10.1093/oxfordhb/9780199640935.013.0012
Abstract: This essay shows that government credit-allocation schemes generate incentive conflicts that undermine the quality of bank supervision and eventually produce banking crisis. For political reasons, most countries establish a regulatory culture that embraces three economically contradictory elements: politically directed subsidies to selected bank borrowers; subsidized provision of explicit or implicit repayment guarantees for the creditors of banks that participate in the credit-allocation scheme; and defective government monitoring and control of the subsidies to leveraged risk-taking that the other two elements produce. In 2007-2008, technological change and regulatory competition simultaneously encouraged incentive-conflicted supervisors to outsource much of their due discipline to credit-rating firms and encouraged banks to securitize their loans in ways that pushed credit risks on poorly underwritten loans into corners of the universe where supervisors and credit-ratings firms would not see them.
Handle: RePEc:nbr:nberwo:13895
Template-Type: ReDIF-Paper 1.0
Title: The Wealth-Consumption Ratio
Classification-JEL: E21; G10; G12
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Author-Name: Adrien Verdelhan
Author-Person: pve80
Note: AP EFG IFM ME
Number: 13896
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13896
File-URL: http://www.nber.org/papers/w13896.pdf
File-Format: application/pdf
Publication-Status: published as Rev Asset Pric Stud (2013) 3 (1): 38-94. doi: 10.1093/rapstu/rat002 First published online: April 11, 2013
Publication-Status: published as Hanno Lustig & Stijn Van Nieuwerburgh & Adrien Verdelhan, 2013. "The Wealth-Consumption Ratio," Review of Asset Pricing Studies, vol 3(1), pages 38-94.
Abstract: We set up an exponentially affine stochastic discount factor model for bond yields and stock returns in order to estimate the prices of aggregate risk. We use the estimated risk prices to compute the no-arbitrage price of a claim to aggregate consumption. The price-dividend ratio of this claim is the wealth-consumption ratio. Our estimates indicate that total wealth is much safer than stock market wealth. The consumption risk premium is only 2.2 percent, substantially below the equity risk premium of 6.9 percent. As a result, the average US household has more wealth than one might think; most of it is human wealth. A large fraction of the variation in total wealth can be traced back to changes in long-term real interest rates. Contrary to conventional wisdom, we find that events in bond markets, not stock markets, matter most for understanding fluctuations in total wealth.
Handle: RePEc:nbr:nberwo:13896
Template-Type: ReDIF-Paper 1.0
Title: Labor Markets and Monetary Policy: A New-Keynesian Model with Unemployment
Classification-JEL: E3; E31; E32; E52
Author-Name: Olivier Blanchard
Author-Person: pbl2
Author-Name: Jordi Gali
Author-Person: pga43
Note: EFG
Number: 13897
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13897
File-URL: http://www.nber.org/papers/w13897.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Blanchard & Jordi Gali, 2010. "Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 1-30, April.
Abstract: We construct a utility-based model of fluctuations, with nominal rigidities and unemployment, and draw its implications for the unemployment-inflation tradeoff and for the conduct of monetary policy.
We proceed in two steps. We first leave nominal rigidities aside. We show that, under a standard utility specification, productivity shocks have no effect on unemployment in the constrained efficient allocation. We then focus on the implications of alternative real wage setting mechanisms for fluctuations in unemployment. We show the role of labor market frictions and real wage rigidities in determining the effects of productivity shocks on unemployment.
We then introduce nominal rigidities in the form of staggered price setting by firms. We derive the relation between inflation and unemployment and discuss how it is influenced by the presence of labor market frictions and real wage rigidities. We show the nature of the tradeoff between inflation and unemployment stabilization, and its dependence on labor market characteristics. We draw the implications for optimal monetary policy.
Handle: RePEc:nbr:nberwo:13897
Template-Type: ReDIF-Paper 1.0
Title: The Transition to Post-industrial BMI Values Among US Children
Classification-JEL: I10
Author-Name: John Komlos
Author-Person: pko37
Author-Name: Ariane Breitfelder
Author-Name: Marco Sunder
Note: EH CH
Number: 13898
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13898
File-URL: http://www.nber.org/papers/w13898.pdf
File-Format: application/pdf
Publication-Status: published as The transition to post-industrial BMI values among US children John Komlos1,*, Ariane Breitfelder1, Marco Sunder2 Article first published online: 5 NOV 2008 DOI: 10.1002/ajhb.20806 Copyright © 2008 Wiley-Liss, Inc. Issue American Journal of Human Biology American Journal of Human Biology Volume 21, Issue 2, pages 151–160, March/April 2009
Abstract: In our opinion, the trend in the BMI values of US children has not been estimated accurately. We use five models to estimate the BMI trends of non-Hispanic US-born black and white children and adolescents ages 2-19 born 1941-2006 on the basis of all NHES and NHANES data sets. We also use some historical BMI values for comparison. The increase in BMIZ values during the period considered was on average 1.3`sigma` (95% CI: 1.16`sigma`; 1.44`sigma`) among black girls, 0.8`sigma` for black boys, 0.7`sigma` for white boys, and 0.6`sigma` for white girls. This translates into an increase in BMI values of some 5.6, 3.3, 2.4, and 1.5 units respectively. While the increase in BMI values started among the birth cohorts of the 1940s among black females, the rate of increase tended to accelerate among all four groups born in the mid-1950s to early-1960s with the contemporaneous spread of TV viewing. The rate of increase levelled off somewhat thereafter. There is some indication that among black boys and white girls born after c. 1990 adiposity has remained unchanged or perhaps even declined. The affects of the IT revolution of the last two decades of the century is less evident. Some regional evidence leads to the speculation that the spread of automobiles and radios affected the BMI values of boys already in the interwar period. We infer that the incremental weight increases are associated with the labor-saving technological developments of the 20th century which brought about many faceted cultural and nutritional revolutions.
Handle: RePEc:nbr:nberwo:13898
Template-Type: ReDIF-Paper 1.0
Title: Is Protection Really for Sale? A Survey and Directions for Future Research
Classification-JEL: D72; F13; F17
Author-Name: Susumu Imai
Author-Name: Hajime Katayama
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ITI
Number: 13899
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13899
File-URL: http://www.nber.org/papers/w13899.pdf
File-Format: application/pdf
Publication-Status: published as Imai, Susumu & Katayama, Hajime & Krishna, Kala, 2009. "Is protection really for sale? A survey and directions for future research," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 181-191, March.
Abstract: This paper critically and selectively surveys the literature on protection for sale and discusses directions for future research in this area. It suggests that the standard approach needs to be augmented to provide more compelling tests of this model.
Handle: RePEc:nbr:nberwo:13899
Template-Type: ReDIF-Paper 1.0
Title: A Quantile-based Test of Protection for Sale Model
Classification-JEL: F13; F14
Author-Name: Susumu Imai
Author-Name: Hajime Katayama
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ITI PE
Number: 13900
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13900
File-URL: http://www.nber.org/papers/w13900.pdf
File-Format: application/pdf
Publication-Status: published as Journal of International Economics Volume 91, Issue 1, September 2013, Pages 40–52
Abstract: This paper proposes a new test of the Protection for Sale (PFS) model by Grossman and Helpman (1994). Unlike existing methods in the literature, our approach does not require any data on political organizations. We formally show that the PFS model predicts that the quantile regression of the protection measure on the inverse import penetration ratio divided by the import demand elasticity, should yield a positive coefficient for quantiles close to one. We test this prediction using the data from Gawande and Bandyopadhyay (2000). The results do not provide any evidence favoring the PFS model.
Handle: RePEc:nbr:nberwo:13900
Template-Type: ReDIF-Paper 1.0
Title: Can Exchange Rates Forecast Commodity Prices?
Classification-JEL: C52; C53; F31; F47
Author-Name: Yu-Chin Chen
Author-Person: pch880
Author-Name: Kenneth Rogoff
Author-Person: pro164
Author-Name: Barbara Rossi
Author-Person: pro86
Note: IFM ME
Number: 13901
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13901
File-URL: http://www.nber.org/papers/w13901.pdf
File-Format: application/pdf
Publication-Status: published as Yu-Chin Chen & Kenneth S. Rogoff & Barbara Rossi, 2010. "Can Exchange Rates Forecast Commodity Prices?," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1145-1194, August.
Abstract: We show that "commodity currency" exchange rates have remarkably robust power in predicting global commodity prices, both in-sample and out-of-sample, and against a variety of alternative benchmarks. This result is of particular interest to policymakers, given the lack of deep forward markets in many individual commodities, and broad aggregate commodity indices in particular. We also explore the reverse relationship (commodity prices forecasting exchange rates) but find it to be notably less robust. We offer a theoretical resolution, based on the fact that exchange rates are strongly forward looking, whereas commodity price fluctuations are typically more sensitive to short-term demand imbalances.
Handle: RePEc:nbr:nberwo:13901
Template-Type: ReDIF-Paper 1.0
Title: Sterilization, Monetary Policy, and Global Financial Integration
Classification-JEL: F15; F21; F31
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Reuven Glick
Author-Person: pgl13
Note: IFM
Number: 13902
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13902
File-URL: http://www.nber.org/papers/w13902.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Reuven Glick, 2009. "Sterilization, Monetary Policy, and Global Financial Integration," Review of International Economics, Blackwell Publishing, vol. 17(4), pages 777-801, 09.
Abstract: This paper investigates the changing pattern and efficacy of sterilization within emerging market countries as they liberalize markets and integrate with the world economy. We estimate the marginal propensity to sterilize foreign asset accumulation associated with net balance of payments inflows, across countries and over time. We find that the extent of sterilization of foreign reserve inflows has risen in recent years to varying degrees in Asia as well as in Latin America, consistent with greater concerns about the potential inflationary impact of reserve inflows. We also find that sterilization depends on the composition of balance of payments inflows.
Handle: RePEc:nbr:nberwo:13902
Template-Type: ReDIF-Paper 1.0
Title: Can Weak Substitution be Rehabilitated?
Classification-JEL: Q51
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Mary F. Evans
Author-Name: H. Spencer Banzhaf
Author-Person: pba328
Author-Name: Christine Poulos
Note: EEE
Number: 13903
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13903
File-URL: http://www.nber.org/papers/w13903.pdf
File-Format: application/pdf
Publication-Status: published as V. Smith & Mary Evans & H. Banzhaf & Christine Poulos, 2010. "Can Weak Substitution be Rehabilitated?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 45(2), pages 203-221, February.
Abstract: This paper develops a graphical analysis and an analytical model that demonstrate how weak substitution can be used for non-market valuation. Both weak complementarity and weak substitution can be evaluated as restrictions that allow quantity or quality changes in non-market goods to be described as price changes that yield equivalent changes in individual well being. They are Hicksian equivalents in that the price changes yield the same utility changes as would the quantity or quality changes. After discussion of several potential applications of weak substitution, the paper develops the parallel between the restriction and recent strategies from modeling differentiated goods.
Handle: RePEc:nbr:nberwo:13903
Template-Type: ReDIF-Paper 1.0
Title: Information Acquisition and Under-Diversification
Classification-JEL: D82; D83; G11; G14
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: AP EFG IFM
Number: 13904
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13904
File-URL: http://www.nber.org/papers/w13904.pdf
File-Format: application/pdf
Publication-Status: published as Stijn Van Nieuwerburgh & Laura Veldkamp, 2010. "Information Acquisition and Under-Diversification," Review of Economic Studies, Blackwell Publishing, vol. 77(2), pages 779-805, 04.
Abstract: If an investor wants to form a portfolio of risky assets and can exert effort to collect information on the future value of these assets before he invests, which assets should he learn about? The best assets to acquire information about are ones the investor expects to hold. But the assets the investor holds depend on the information he observes. We build a framework to solve jointly for investment and information choices, with a variety of preferences and information cost functions. Although the optimal research strategies depend on preferences and costs, the main result is that the investor who can first collect information systematically deviates from holding a diversified portfolio. Information acquisition can rationalize investing in a diversified fund and a concentrated set of assets, an allocation often observed, but usually deemed anomalous.
Handle: RePEc:nbr:nberwo:13904
Template-Type: ReDIF-Paper 1.0
Title: Is There Dowry Inflation in South Asia?
Classification-JEL: C1; D1; J1; O10
Author-Name: Raj Arunachalam
Author-Person: par130
Author-Name: Trevon Logan
Author-Person: plo110
Note: LS DAE
Number: 13905
Creation-Date: 2008-03
Order-URL: http://www.nber.org/papers/w13905
File-URL: http://www.nber.org/papers/w13905.pdf
File-Format: application/pdf
Publication-Status: published as Trevon D. Logan & Raj Arunachalam, 2014. "Is There Dowry Inflation in South Asia?," Historical Methods: A Journal of Quantitative and Interdisciplinary History, Taylor & Francis Journals, vol. 47(2), pages 81-94, June.
Abstract: This paper is the first systematic attempt to measure the existence and degree of dowry inflation in South Asia. The popular press and scholarly literature have assumed dowry inflation in South Asia for some time, and there are now a number of theoretical papers that have attempted to explain the rise of dowries in South Asia. Despite these advances, there has been no systematic study of dowry inflation. Using large-sample retrospective survey data from India, Bangladesh, Pakistan, and Nepal, we assess the empirical evidence for dowry infllation. We find no evidence that real dowry amounts have systematically increased over time in South Asia.
Handle: RePEc:nbr:nberwo:13905
Template-Type: ReDIF-Paper 1.0
Title: Current Account Dynamics and Monetary Policy
Classification-JEL: E0; F0
Author-Name: Andrea Ferrero
Author-Person: pfe99
Author-Name: Mark Gertler
Author-Person: pge11
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: EFG IFM ME
Number: 13906
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13906
File-URL: http://www.nber.org/papers/w13906.pdf
File-Format: application/pdf
Publication-Status: published as Current Account Dynamics and Monetary Policy, Andrea Ferrero, Mark Gertler, Lars E. O. Svensson. in International Dimensions of Monetary Policy , Galí and Gertler. 2009
Abstract: We explore the implications of current account adjustment for monetary policy within a simple two-country DSGE model. Our framework nests Obstfeld and Rogoff's (2005) static model of exchange rate responsiveness to current account reversals. It extends this approach by endogenizing the dynamic adjustment path and by incorporating production and nominal price rigidities in order to study the role of monetary policy. We consider two different adjustment scenarios. The first is a "slow burn" where the adjustment of the current account deficit of the home country is smooth and slow. The second is a "fast burn" where, owing to a sudden shift in expectations of relative growth rates, there is a rapid reversal of the home country's current account. We examine several different monetary policy regimes under each of these scenarios. Our principal finding is that the behavior of the domestic variables (for instance, output, inflation) is quite sensitive to the monetary regime, while the behavior of the international variables (for instance, the current account and the real exchange rate) is less so. Among different policy rules, domestic inflation targeting achieves the best stabilization outcome of aggregate variables. This result is robust to the presence of imperfect pass-through on import prices, although in this case stabilization of consumer price inflation performs similarly well.
Handle: RePEc:nbr:nberwo:13906
Template-Type: ReDIF-Paper 1.0
Title: Ideology
Classification-JEL: D72; D83; H11; P16; Z1
Author-Name: Roland Bénabou
Author-Person: pbe27
Note: EFG POL
Number: 13907
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13907
File-URL: http://www.nber.org/papers/w13907.pdf
File-Format: application/pdf
Publication-Status: published as R. Bénabou, “Ideology,” Journal of the European Economic Association, 6(2-3), (2008), pp. 321352.
Abstract: I develop a model of ideologies as collectively sustained (yet individually rational) distortions in beliefs concerning the proper scope of governments versus markets. In processing and interpreting signals of the efficacy of public and market provision of education, health insurance, pensions, etc., individuals optimally trade off the value of remaining hopeful about their future prospects (or their children's) versus the costs of misinformed decisions. Because these future outcomes also depend on whether other citizens respond to unpleasant facts with realism or denial, endogenous social cognitions emerge. Thus, an equilibrium in which people acknowledge the limitations of interventionism coexists with one in which they remain obstinately blind to them, embracing a statist ideology and voting for an excessively large government. Conversely, an equilibrium associated with appropriate public responses to market failures coexists with one dominated by a laissez-faire ideology and blind faith in the invisible hand. With public-sector capital, this interplay of beliefs and institutions leads to history-dependent dynamics. The model also explains why societies find it desirable to set up constitutional protections for dissenting views, even when ex-post everyone would prefer to ignore unwelcome news.
Handle: RePEc:nbr:nberwo:13907
Template-Type: ReDIF-Paper 1.0
Title: Why do Foreigners Invest in the United States?
Classification-JEL: F2; F3; F4; G1
Author-Name: Kristin J. Forbes
Author-Person: pfo1
Note: CF IFM ITI
Number: 13908
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13908
File-URL: http://www.nber.org/papers/w13908.pdf
File-Format: application/pdf
Publication-Status: published as Forbes, Kristin J., 2010. "Why do foreigners invest in the United States?," Journal of International Economics, Elsevier, vol. 80(1), pages 3-21, January.
Abstract: Why are foreigners willing to invest almost $2 trillion per year in the United States? The answer affects if the existing pattern of global imbalances can persist and if the United States can continue to finance its current account deficit without a major change in asset prices and returns. This paper tests various hypotheses and finds that standard portfolio allocation models and diversification motives are poor predictors of foreign holdings of U.S. liabilities. Instead, foreigners hold greater shares of their investment portfolios in the United States if they have less developed financial markets. The magnitude of this effect decreases with income per capita. Countries with fewer capital controls and greater trade with the United States also invest more in U.S. equity and bond markets, and there is no evidence that foreigners invest in the United States based on diversification motives. The empirical results showing a primary role of financial market development in driving foreign purchases of U.S. portfolio liabilities supports recent theoretical work on global imbalances.
Handle: RePEc:nbr:nberwo:13908
Template-Type: ReDIF-Paper 1.0
Title: The Euro May Over the Next 15 Years Surpass the Dollar as Leading International Currency
Classification-JEL: E42; F0; F02; F31
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 13909
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13909
File-URL: http://www.nber.org/papers/w13909.pdf
File-Format: application/pdf
Abstract: The euro has arisen as a credible eventual competitor to the dollar as leading international currency, much as the dollar rose to challenge the pound 70 years ago. This paper uses econometrically-estimated determinants of the shares of major currencies in the reserve holdings of the world's central banks. Significant factors include: size of the home country, rate of return, and liquidity in the relevant home financial center (as measured by the turnover in its foreign exchange market). There is a tipping phenomenon, but changes are felt only with a long lag (we estimate a weight on the preceding year's currency share around .9). The equation correctly predicts out-of-sample a (small) narrowing in the gap between the dollar and euro over the period 1999-2007. This paper updates calculations regarding possible scenarios for the future. We exclude the scenario where the United Kingdom joins euroland. But we do take into account of the fact that London has nonetheless become the de facto financial center of the euro, more so than Frankfurt. We also assume that the dollar continues in the future to depreciate at the trend rate that it has shown on average over the last 20 years. The conclusion is that the euro may surpass the dollar as leading international reserve currency as early as 2015.
Handle: RePEc:nbr:nberwo:13909
Template-Type: ReDIF-Paper 1.0
Title: The Dynamic Behavior of the Real Exchange Rate in Sticky Price Models
Classification-JEL: F31; F41
Author-Name: Jón Steinsson
Author-Person: pst155
Note: IFM ME
Number: 13910
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13910
File-URL: http://www.nber.org/papers/w13910.pdf
File-Format: application/pdf
Publication-Status: published as Jón Steinsson, 2008. "The Dynamic Behavior of the Real Exchange Rate in Sticky Price Models," American Economic Review, American Economic Association, vol. 98(1), pages 519-33, March.
Abstract: Existing empirical evidence suggests that real exchange rates exhibit hump-shaped dynamics. I show that this is a robust fact across nine large, developed economies. This fact can help explain why existing sticky-price business cycle models have been unable to match the persistence of the real exchange rate. The recent literature has focused on models driven by monetary shocks. These models yield monotonic impulse responses for the real exchange rate. It is extremely difficult for models that have this feature to match the empirical persistence of the real exchange rate. I show that in response to a number of different real shocks a two-country sticky-price business cycle model yields hump-shaped dynamics for the real exchange rate. The hump-shaped dynamics generated by the model are a powerful source of endogenous persistence that allows the model to match the long half-life of the real exchange rate.
Handle: RePEc:nbr:nberwo:13910
Template-Type: ReDIF-Paper 1.0
Title: Policy Uncertainty and Precautionary Savings
Classification-JEL: E21; E61; J22
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Michael McMahon
Author-Person: pmc143
Note: IFM EFG PE
Number: 13911
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13911
File-URL: http://www.nber.org/papers/w13911.pdf
File-Format: application/pdf
Abstract: In 1997 Chancellor Kohl proposed a major pension reform and pushed the law through Parliament explaining that the German PAYG system had become unsustainable. One limitation of the new law -- one that is crucial for our identification strategy -- is that it left the generous pension entitlements of civil servants intact. The year after, in 1998, Kohl lost the elections and was replaced by Gerhard Shroeder. One of the first decisions of the new Chancellor was to revoke the 1997 pension reform. We use the quasi-experiment of the adoption and subsequent revocation of the pension reform to study how households reacted to the increase in uncertainty about the future path of income that such an event produced. Our estimates are obtained from a diff-in-diff estimator: this helps us overcome the identification problem that often affects measures of precautionary saving. Departing from the majority of studies on precautionary saving we also analyze households' response in terms of labor market choices: we find evidence of a labor supply response by those workers who can use the margin offered by part-time employment
Handle: RePEc:nbr:nberwo:13911
Template-Type: ReDIF-Paper 1.0
Title: The Nature of Credit Constraints and Human Capital
Classification-JEL: H81; I22; I28
Author-Name: Lance J. Lochner
Author-Person: plo31
Author-Name: Alexander Monge-Naranjo
Author-Person: pmo730
Note: ED EFG LS PE
Number: 13912
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13912
File-URL: http://www.nber.org/papers/w13912.pdf
File-Format: application/pdf
Publication-Status: published as Lance J. Lochner & Alexander Monge-Naranjo, 2011. "The Nature of Credit Constraints and Human Capital," American Economic Review, American Economic Association, vol. 101(6), pages 2487-2529, October.
Abstract: This paper studies the nature and impact of credit constraints in the market for human capital. We derive endogenous constraints from the design of government student loan programs and from the limited repayment incentives in private lending markets. These constraints imply cross-sectional patterns for schooling, ability, and family income that are consistent with U.S. data. This contrasts with the standard exogenous constraint model, which predicts a counterfactual negative ability -- schooling relationship for low-income youth. We show that the rising empirical importance of familial wealth and income in determining college attendance (Belley and Lochner 2007) is consistent with increasingly binding credit constraints in the face of rising tuition costs and returns to schooling. Our framework also explains the recent increase in private credit for college as a market response to the rising returns to school.
Handle: RePEc:nbr:nberwo:13912
Template-Type: ReDIF-Paper 1.0
Title: Institutions, Technology, and Trade
Classification-JEL: F1; F3; N10; O24; O3
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: Carol H. Shiue
Note: DAE IFM ITI
Number: 13913
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13913
File-URL: http://www.nber.org/papers/w13913.pdf
File-Format: application/pdf
Abstract: We study the importance of technology and institutions in determining the size of markets in five different countries and fifteen different German states. The setting of 19th century Europe presents a unique opportunity to address this issue, since it witnessed fundamental change in both dimensions. At the beginning of the century, numerous customs borders, separate currencies with different monetary systems, and poor transportation facilities were major obstacles that held back trade. Important institutional change, through the Zollverein customs treaties and currency unification, and major technological innovations in the steam train all had a role in increasing market size as measured in terms of the spatial dispersion of grain prices across 68 markets. However, we find that the impact of steam trains is substantially larger than the effects from customs liberalizations and currency agreements in increasing market size, where correcting for the potential endogeneity in institutional and technological changes are crucial for this result. We also find that a state's institutions influence the rate of adoption of steam trains, thereby identifying an important indirect effect from institutions on economic performance. The institutional and technological changes account for almost all of the decline in price gaps over this period.
Handle: RePEc:nbr:nberwo:13913
Template-Type: ReDIF-Paper 1.0
Title: Innocents Abroad: The Hazards of International Joint Ventures with Pyramidal Group Firms
Classification-JEL: G3; G34; L96; M16; O54
Author-Name: Susan Perkins
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 13914
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13914
File-URL: http://www.nber.org/papers/w13914.pdf
File-Format: application/pdf
Publication-Status: published as Susan Perkins & Randall Morck & Bernard Yeung, 2014. "Innocents Abroad: The Hazards of International Joint Ventures with Pyramidal Group Firms," Global Strategy Journal, vol 4(4), pages 310-330.
Abstract: The fundamental unit of production in microeconomics is the firm, and this mirrors reality in the United States and United Kingdom. But elsewhere, business groups can be the more important unit, for business strategy is often formulated at the business group level, not the firm level. In many countries, this is legally enshrined in corporate governance codes that assign officers and directors a duty to act for their business group, not their firm or its shareholders. Even where a duty to individual firms' shareholders exists, business groups often have pyramidal structures of intercorporate blockholdings that entrench controlling shareholders, usually wealthy families, who run their groups to maximize their utility. This can impose exacerbated agency problems. In either case, foreign joint venture partners who expect domestic firms to maximize shareholder value can be sorely disappointed. We explain agency behavior in business groups and how controlling insiders can divert resources between firms they control, including joint ventures, to enrich themselves; and highlight differences between this behavior and agency problems in freestanding firms. We then examine the telecoms industry in Brazil, a country in which most large businesses belong to pyramidal business groups controlled by wealthy families. We find that joint ventures between Brazilian telecoms firms and partners from countries where business groups are rarer have significantly elevated failure rates; while joint ventures with foreign partners from countries where pyramidal groups are more common are more likely to succeed. We then present clinical examples illustrating the mechanisms that drive such divergent performance in joint venture partnerships. While our results are based on a single industry in a single country, we believe they highlight a previously unexamined important issue in international business strategy.
Handle: RePEc:nbr:nberwo:13914
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Military Dictatorships
Classification-JEL: H20; N10; N40; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Davide Ticchi
Author-Person: pti48
Author-Name: Andrea Vindigni
Author-Person: pvi120
Note: EFG POL
Number: 13915
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13915
File-URL: http://www.nber.org/papers/w13915.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2010. "A Theory of Military Dictatorships," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 1-42, January.
Abstract: We investigate how nondemocratic regimes use the military and how this can lead to the emergence of military dictatorships. Nondemocratic regimes need the use of force in order to remain in power, but this creates a political moral hazard problem; a strong military may not simply work as an agent of the elite but may turn against them in order to create a regime more in line with their own objectives. The political moral hazard problem increases the cost of using repression in nondemocratic regimes and in particular, necessitates high wages and policy concessions to the military. When these concessions are not sufficient, the military can take action against a nondemocratic regime in order to create its own dictatorship. A more important consequence of the presence of a strong military is that once transition to democracy takes place, the military poses a coup threat against the nascent democratic regime until it is reformed. The anticipation that the military will be reformed in the future acts as an additional motivation for the military to undertake coups against democratic governments. We show that greater inequality makes the use of the military in nondemocratic regimes more likely and also makes it more difficult for democracies to prevent military coups. In addition, greater inequality also makes it more likely that nondemocratic regimes are unable to solve the political moral hazard problem and thus creates another channel for the emergence of military dictatorships. We also show that greater natural resource rents make military coups against democracies more likely, but have ambiguous effects on the political equilibrium in nondemocracies (because with abundant natural resources, repression becomes more valuable to the elite, but also more expensive to maintain because of the more severe political moral hazard that natural resources induce). Finally, we discuss how the national defense role of the military interacts with its involvement in domestic politics.
Handle: RePEc:nbr:nberwo:13915
Template-Type: ReDIF-Paper 1.0
Title: Nearly Optimal Pricing for Multiproduct Firms
Classification-JEL: D4; L0; L11
Author-Name: Chenghuan Sean Chu
Author-Name: Phillip Leslie
Author-Name: Alan Sorensen
Note: IO
Number: 13916
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13916
File-URL: http://www.nber.org/papers/w13916.pdf
File-Format: application/pdf
Abstract: In principle, a multiproduct firm can set separate prices for all possible bundled combinations of its products (i.e., "mixed bundling"). However, this is impractical for firms with more than a few products, because the number of prices increases exponentially with the number of products. In this study we show that simple pricing strategies are often nearly optimal -- i.e., with surprisingly few prices a firm can obtain 99% of the profit that would be earned by mixed bundling. Specifically, we show that bundle-size pricing -- setting prices that depend only on the size of bundle purchased -- tends to be more profitable than offering the individual products priced separately, and tends to closely approximate the profits from mixed bundling. These findings are based on an array of numerical experiments covering a broad range of demand and cost scenarios, as well as an empirical analysis of the pricing problem for an 8-product firm (a theater company).
Handle: RePEc:nbr:nberwo:13916
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Medicare Part D on Pharmaceutical Prices and Utilization
Classification-JEL: H57; I11; I18; L11; L51
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Fiona Scott Morton
Note: EH IO PE
Number: 13917
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13917
File-URL: http://www.nber.org/papers/w13917.pdf
File-Format: application/pdf
Publication-Status: published as Mark Duggan & Fiona Scott Morton, 2010. "The Effect of Medicare Part D on Pharmaceutical Prices and Utilization," American Economic Review, American Economic Association, vol. 100(1), pages 590-607, March.
Abstract: On January 1, 2006, the federal government began providing insurance coverage for Medicare recipients' prescription drug expenditures through a new program known as Medicare Part D. Rather than setting pharmaceutical prices itself, the government contracted with private insurance plans to provide this coverage. Enrollment in Part D was voluntary, with each Medicare recipient allowed to choose from one of the private insurers with a contract to offer coverage in her geographic region. This paper evaluates the effect of this program on the price and utilization of pharmaceutical treatments. Theoretically, it is ambiguous whether the expansion in insurance coverage would increase or reduce pharmaceutical prices. Insurance-induced reductions in demand elasticities would predict an increase in pharmaceutical firms' optimal prices. However, Part D plans could potentially negotiate price discounts through their ability to influence the market share of specific treatments. Using data on product-specific prices and quantities sold in each year in the U.S., our findings indicate that Part D substantially lowered the average price and increased the total utilization of prescription drugs by Medicare recipients. Our results further suggest that the magnitude of these average effects varies across drugs as predicted by economic theory.
Handle: RePEc:nbr:nberwo:13917
Template-Type: ReDIF-Paper 1.0
Title: The "Thin Film Of Gold": Monetary Rules and Policy Credibility In Developing Countries
Classification-JEL: F2; F33; F36; N10; N20
Author-Name: Niall Ferguson
Author-Name: Moritz Schularick
Note: DAE ITI IFM ME
Number: 13918
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13918
File-URL: http://www.nber.org/papers/w13918.pdf
File-Format: application/pdf
Publication-Status: published as European Review of Economic History (2012) 16 (4): 384-407. doi: 10.1093/ereh/hes006 First published online: October 19, 2012
Abstract: This paper asks whether developing countries can reap credibility gains from submitting policy to a strict monetary rule. Following earlier work, we look at the gold standard era (1880-1914) as a "natural experiment" to test whether adoption of a rule-based monetary framework such as the gold standard increased policy credibility. On the basis of the largest possible dataset covering almost sixty independent and colonial borrowers in the London market, we challenge the traditional view that gold standard adherence worked as a credible commitment mechanism that was rewarded by financial markets with lower borrowing costs. We demonstrate that in the poor periphery -- where policy credibility is a particularly acute problem -- the market looked behind "the thin film of gold". Our results point to a dichotomy: whereas country risk premia fell after gold adoption in developed countries, there were no credibility gains in the volatile economic and political environments of developing countries. History shows that monetary policy rules are no short-cut to credibility in situations where vulnerability to economic and political shocks, not time-inconsistency, are overarching concerns for investors.
Handle: RePEc:nbr:nberwo:13918
Template-Type: ReDIF-Paper 1.0
Title: Women's Liberation: What's in It for Men?
Classification-JEL: D13; E13; J16; N30; O43
Author-Name: Matthias Doepke
Author-Person: pdo8
Author-Name: Michèle Tertilt
Author-Person: pte114
Note: DAE ED EFG POL
Number: 13919
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13919
File-URL: http://www.nber.org/papers/w13919.pdf
File-Format: application/pdf
Publication-Status: published as Matthias Doepke & Michèle Tertilt, 2009. "Women's Liberation: What's in It for Men?," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1541-1591, November.
Abstract: The nineteenth century witnessed dramatic improvements in the legal rights of married women. Given that these changes took place long before women gained the right to vote, they amounted to a voluntary renouncement of power by men. In this paper, we investigate men's incentives for sharing power with women. In our model, women's legal rights set the marital bargaining power of husbands and wives. We show that men face a tradeoff between the rights they want for their own wives (namely none) and the rights of other women in the economy. Men prefer other men's wives to have rights because men care about their own daughters and because an expansion of women's rights increases educational investments in children. We show that men may agree to relinquish some of their power once technological change increases the importance of human capital. We corroborate our argument with historical evidence on the expansion of women's rights in England and the United States.
Handle: RePEc:nbr:nberwo:13919
Template-Type: ReDIF-Paper 1.0
Title: Assessing Job Flows Across Countries: The Role of Industry, Firm Size and Regulations
Classification-JEL: J23; J53; K31
Author-Name: John Haltiwanger
Author-Person: pha231
Author-Name: Stefano Scarpetta
Author-Person: psc30
Author-Name: Helena Schweiger
Note: EFG LS
Number: 13920
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13920
File-URL: http://www.nber.org/papers/w13920.pdf
File-Format: application/pdf
Abstract: This paper analyzes job flows in a sample of 16 industrial and emerging economies over the past decade, exploiting a harmonized firm-level dataset. It shows that industry and firm size effects (and especially firm size) account for a large fraction in the overall variability in job flows. However, large residual differences remain in the job flow patterns across countries. To account for the latter, the paper explores the role of differences in employment protection legislation across countries. Using a difference-in-difference approach that minimizes possible endogeneity and omitted variable problems, our findings show that hiring and firing costs tend to curb job flows, particularly in those industries and firm size classes that require more frequent labor adjustment.
Handle: RePEc:nbr:nberwo:13920
Template-Type: ReDIF-Paper 1.0
Title: Current Account Patterns and National Real Estate Markets
Classification-JEL: F15; F21; F32; R21; R31
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Note: ITI IFM
Number: 13921
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13921
File-URL: http://www.nber.org/papers/w13921.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Jinjarak, Yothin, 2009. "Current account patterns and national real estate markets," Journal of Urban Economics, Elsevier, vol. 66(2), pages 75-89, September.
Abstract: This paper studies the association between the current account and real estate valuation across countries, subject to data availability [43 countries, of which 25 are OECD], during 1990 - 2005. We find robust and strong positive association between current account deficits and the appreciation of the real estate prices/(GDP deflator). Controlling for lagged GDP/capita growth, inflation, financial depth, institution, urban population growth and the real interest rate; a one standard deviation increase of the lagged current account deficits is associated with a real appreciation of the real estate prices by 10%. This real appreciation is magnified by financial depth, and mitigated by the quality of institutions. Intriguingly, the economic importance of current account variations in accounting for the real estate valuation exceeds that of the other variables, including the real interest rate and inflation. Among the OECD countries, we find evidence of a decline overtime in the cross country variation of the real estate/(GDP deflator), consistent with the growing globalization of national real estate markets. Weaker patterns apply to the non-OECD countries in the aftermath of the East Asian crisis.
Handle: RePEc:nbr:nberwo:13921
Template-Type: ReDIF-Paper 1.0
Title: Gender Differences in Seeking Challenges: The Role of Institutions
Classification-JEL: C91; J0; J16; J24
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Alexandra H. Yestrumskas
Note: LS
Number: 13922
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13922
File-URL: http://www.nber.org/papers/w13922.pdf
File-Format: application/pdf
Abstract: We examine whether women and men of the same ability differ in their decisions to seek challenges. In the laboratory, we create an environment in which we can measure a participants performance level (high or low), where a high performance level participant has on average higher earnings from solving a hard rather than an easy task, and vice versa. After we identify each participant's performance level, they choose the difficulty level (easy or hard) for the next two tasks (only one of which will be chosen for payment). Although there are no gender differences in performance, or beliefs about relative performance, men choose the hard task about 50 percent more frequently than women, independent of performance level. Gender differences in preferences for characteristics of the tasks cannot account for this gender gap. When we allow for a flexible choice high performing women choose the hard task significantly more often, at a rate now similar to the decision of men. Such a flexible choice makes challenging choices easier when participants are either risk averse, or uncertain about their ability. Our results highlight the role of institution design in affecting choices of women and men, and the resulting gender differences in representation in challenging tasks.
Handle: RePEc:nbr:nberwo:13922
Template-Type: ReDIF-Paper 1.0
Title: How Costly is Diversity? Affirmative Action in Light of Gender Differences in Competitiveness
Classification-JEL: C91; J16; J24
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Carmit Segal
Author-Name: Lise Vesterlund
Author-Person: pve25
Note: LS
Number: 13923
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13923
File-URL: http://www.nber.org/papers/w13923.pdf
File-Format: application/pdf
Publication-Status: published as Muriel Niederle & Carmit Segal & Lise Vesterlund, 2013. "How Costly Is Diversity? Affirmative Action in Light of Gender Differences in Competitiveness," Management Science, INFORMS, vol. 59(1), pages 1-16, May.
Abstract: Recent research documents that while men are eager to compete, women often shy away from competitive environments. A consequence is that few women enter and win competitions. Using experimental methods we examine how affirmative action affects competitive entry. We find that when women are guaranteed equal representation among winners, more women and fewer men enter competitions, and the response exceeds that predicted by changes in the probability of winning. An explanation for this response is that under affirmative action the probability of winning depends not only on one's rank relative to other group members, but also on one's rank within gender. Both beliefs on rank and attitudes towards competition change when moving to a more gender-specific competition. The changes in competitive entry have important implications when assessing the costs of affirmative action. Based on ex-ante tournament entry affirmative action is predicted to lower the performance requirement for women and thus result in reverse discrimination towards men. Interestingly this need not be the outcome when competitive entry is not payoff maximizing. The response in entry implies that it may not be necessary to lower the performance requirement for women to achieve a more diverse set of winners.
Handle: RePEc:nbr:nberwo:13923
Template-Type: ReDIF-Paper 1.0
Title: Inflation and Unemployment in the Long Run
Classification-JEL: E24; E52
Author-Name: Aleksander Berentsen
Author-Person: pbe22
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG LS ME
Number: 13924
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13924
File-URL: http://www.nber.org/papers/w13924.pdf
File-Format: application/pdf
Publication-Status: published as Aleksander Berentsen & Guido Menzio & Randall Wright, 2011. "Inflation and Unemployment in the Long Run," American Economic Review, American Economic Association, vol. 101(1), pages 371-98, February.
Abstract: We study the long-run relation between money, measured by inflation or interest rates, and unemployment. We first discuss data, documenting a strong positive relation between the variables at low frequencies. We then develop a framework where both money and unemployment are modeled using explicit microfoundations, integrating and extending recent work in macro and monetary economics, and providing a unified theory to analyze labor and goods markets. We calibrate the model, to ask how monetary factors account quantitatively for low-frequency labor market behavior. The answer depends on two key parameters: the elasticity of money demand, which translates monetary policy to real balances and profits; and the value of leisure, which affects the transmission from profits to entry and employment. For conservative parameterizations, money accounts for some but not that much of trend unemployment -- by one measure, about 1/5 of the increase during the stagflation episode of the 70s can be explained by monetary policy alone. For less conservative but still reasonable parameters, money accounts for almost all low-frequency movement in unemployment over the last half century.
Handle: RePEc:nbr:nberwo:13924
Template-Type: ReDIF-Paper 1.0
Title: Interest Rates and the Exchange Rate: A Non-Monotonic Tale
Classification-JEL: E52; F41
Author-Name: Viktoria Hnatkovska
Author-Person: phn1
Author-Name: Amartya Lahiri
Author-Person: pla150
Author-Name: Carlos A. Vegh
Author-Person: pve34
Note: IFM
Number: 13925
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13925
File-URL: http://www.nber.org/papers/w13925.pdf
File-Format: application/pdf
Publication-Status: published as European Economic Review Volume 63, October 2013, Pages 68–93
Abstract: What is the relationship between interest rates and the exchange rate? The empirical literature in this area has been inconclusive. We use an optimizing model of a small open economy to rationalize the mixed empirical findings. The model has three key margins. First, higher domestic interest rates raise the demand for deposits, and, hence, the money base. Second, firms need bank loans to finance the wage bill, which reduces output when domestic interest rates increase. Lastly, higher interest rates raise the government's fiscal burden, and, therefore, can lead to higher expected inflation. While the first effect tends to appreciate the currency, the remaining two effects tend to depreciate it. We then conduct policy experiments using a calibrated version of the model and show the central result of the paper: the relationship between interest rates and the exchange rate is non-monotonic. In particular, the exchange rate response depends on the size of the interest rate increase and on the initial level of the interest rate. Moreover, we also show that the model can replicate the heterogeneous responses of the exchange rate to interest rate innovations in several developing economies.
Handle: RePEc:nbr:nberwo:13925
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action in Education: Evidence From Engineering College Admissions in India
Classification-JEL: I21; I38; J7
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Note: ED LS
Number: 13926
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13926
File-URL: http://www.nber.org/papers/w13926.pdf
File-Format: application/pdf
Publication-Status: published as Bertrand, Marianne & Hanna, Rema & Mullainathan, Sendhil, 2010. "Affirmative action in education: Evidence from engineering college admissions in India," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 16-29, February.
Abstract: Many countries mandate affirmative action in university admissions for traditionally disadvantaged groups. Little is known about either the efficacy or costs of these programs. This paper examines affirmative action in engineering colleges in India for "lower-caste" groups. We find that it successfully targets the financially disadvantaged: the marginal upper-caste applicant comes from a more advantaged background than the marginal lower-caste applicant who displaces him. Despite much lower entrance exam scores, the marginal lower-caste entrant does benefit: we find a strong, positive economic return to admission. These findings contradict common arguments against affirmative action: that it is only relevant for richer lower-caste members, or that those who are admitted are too unprepared to benefit from the education. However, these benefits come at a cost. Our point estimates suggest that the marginal upper-caste entrant enjoys nearly twice the earnings level gain as the marginal lower-caste entrant. This finding illustrates the program's redistributive nature: it benefits the poor, but costs resources in absolute terms. One reason for this lower level gain is that a smaller fraction of lower-caste admits end up employed in engineering or advanced technical jobs. Finally, we find no evidence that the marginal upper-caste applicant who is rejected due to the policy ends up with more negative attitudes towards lower castes or towards affirmative action programs. On the other hand, there is some weak evidence that the marginal lower-caste admits become stronger supporters of affirmative action programs.
Handle: RePEc:nbr:nberwo:13926
Template-Type: ReDIF-Paper 1.0
Title: Climate Economics: A Meta-Review and Some Suggestions
Classification-JEL: D8; D9; Q01
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE PE
Number: 13927
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13927
File-URL: http://www.nber.org/papers/w13927.pdf
File-Format: application/pdf
Publication-Status: published as Geoffrey Heal, 2009. "Climate Economics: A Meta-Review and Some Suggestions for Future Research," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 3(1), pages 4-21, Winter.
Abstract: What have we learned from the outpouring of literature as a result of the Stern Review of the Economics of Climate Change? A lot. We have explored the model space and the parameter space much more thoroughly, though there are still unexplored regions. While there are aspects of the Stern Review's analysis with which we can disagree, it seems fair to say that it has catalyzed a fundamental rethinking of the economic case for action on climate change. We are now in a position to give some conditions that are sufficient to provide a case for strong action on climate change, but need more work before we have a fully satisfactory account of the relevant economics. In particular we need to understand better how climate change affects natural capital - the natural environment and the ecosystems comprising it - and how these affect human welfare.
Handle: RePEc:nbr:nberwo:13927
Template-Type: ReDIF-Paper 1.0
Title: Is Marriage Always Good for Children? Evidence from Families Affected by Incarceration
Classification-JEL: I2; J12; J13; J18
Author-Name: Keith Finlay
Author-Person: pfi85
Author-Name: David Neumark
Author-Person: pne16
Note: CH LS
Number: 13928
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13928
File-URL: http://www.nber.org/papers/w13928.pdf
File-Format: application/pdf
Publication-Status: published as Keith Finlay & David Neumark, 2010. "Is Marriage Always Good for Children?: Evidence from Families Affected by Incarceration," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 1046-1088.
Abstract: One-third of children in the United States are born to unmarried parents. A substantial number of black and Hispanic children live with a never-married mother. Children of never-married mothers are more likely to drop out of high school, repeat grades, and have behavioral problems than are children raised in more traditional family structures. But these relationships may be driven by other factors that affect marital status at birth, post-conception marriage decisions, and later child outcomes, rather than causal effects of family structure. Given that changes in the availability of men in the marriage market should affect marriage decisions, we use incarceration rates for men as an instrumental variable for family structure in estimating the effect of never-married motherhood on the likelihood that children drop out of high school, focusing on blacks and Hispanics. Instrumental variables estimates suggest that unobserved factors rather than a causal effect drive the negative relationship between never-married motherhood and child outcomes for blacks and Hispanics, at least for the children of women whose marriage decisions are most affected by variation in incarceration rates for men. For Hispanics, in particular, we find evidence that these children may actually be better off living with a never-married mother.
Handle: RePEc:nbr:nberwo:13928
Template-Type: ReDIF-Paper 1.0
Title: The Retirement Consumption Puzzle: Actual Spending Change in Panel Data
Classification-JEL: D91; J26
Author-Name: Michael D. Hurd
Author-Person: phu137
Author-Name: Susann Rohwedder
Author-Person: pro270
Note: AG
Number: 13929
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13929
File-URL: http://www.nber.org/papers/w13929.pdf
File-Format: application/pdf
Abstract: The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates over retirement, at rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. In the low-wealth population where spending did decline at higher rates, the main explanation for the decline appears to be a high rate of early retirement due to poor health. We conclude that at the population level there is no retirement consumption puzzle in our data, and that in subpopulations where there were substantial declines, conventional economic theory can provide the main explanation.
Handle: RePEc:nbr:nberwo:13929
Template-Type: ReDIF-Paper 1.0
Title: Brand Names Before the Industrial Revolution
Classification-JEL: L15; L2; N13; N4; N6; O14; O34; O5
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE IO
Number: 13930
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13930
File-URL: http://www.nber.org/papers/w13930.pdf
File-Format: application/pdf
Abstract: In medieval Europe, manufacturers sold durable goods to anonymous consumers in distant markets, this essay argues, by making products with conspicuous characteristics. Examples of these unique, observable traits included cloth of distinctive colors, fabric with unmistakable weaves, and pewter that resonated at a particular pitch. These attributes identified merchandise because consumers could observe them readily, but counterfeiters could copy them only at great cost, if at all. Conspicuous characteristics fulfilled many of the functions that patents, trademarks, and brand names do today. The words that referred to products with conspicuous characteristics served as brand names in the Middle Ages. Data drawn from an array of industries corroborates this conjecture. The abundance of evidence suggests that conspicuous characteristics played a key role in the expansion of manufacturing before the Industrial Revolution.
Handle: RePEc:nbr:nberwo:13930
Template-Type: ReDIF-Paper 1.0
Title: Training Disadvantaged Youth in Latin America: Evidence from a Randomized Trial
Classification-JEL: C21; I38; J24
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Adriana Kugler
Author-Person: pku361
Author-Name: Costas Meghir
Author-Person: pme144
Note: EFG LS PE
Number: 13931
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13931
File-URL: http://www.nber.org/papers/w13931.pdf
File-Format: application/pdf
Publication-Status: published as “Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized Trial,” (with Orazio Attanasio and Costas Meghir), American Economic Journal: Applied Economics, July (2011), 3(3): 188-220. Featured in J-Pal Policy Briefcase, August 2012.
Abstract: Youth unemployment in Latin America is exceptionally high, as much as 50% among the poor. Vocational training may be the best chance to help unemployed young people at the bottom of the income distribution. This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005 on the employment and earnings of trainees. This is one of a couple of randomized training trials conducted in developing countries and, thus, offers a unique opportunity to examine the causal impact of training in a developing country context. We use originally collected data on individuals randomly offered and not offered training. We find that the program raises earnings and employment for both men and women, with larger effects on women. Women offered training earn about 18% more than those not offered training, while men offered training earn about 8% more than men not offered training. Much of the earnings increases for both men and women are related to increased employment in formal sector jobs following training. The benefits of training are greater when individuals spend more time doing on-the-job training, while hours of training in the classroom have no impact on the returns to training. Cost-benefit analysis of these results suggests that the program generates a large net gain, especially for women.
Handle: RePEc:nbr:nberwo:13931
Template-Type: ReDIF-Paper 1.0
Title: Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence
Classification-JEL: E52; E58
Author-Name: Alan S. Blinder
Author-Person: pbl41
Author-Name: Michael Ehrmann
Author-Person: peh4
Author-Name: Marcel Fratzscher
Author-Person: pfr34
Author-Name: Jakob De Haan
Author-Person: pde190
Author-Name: David-Jan Jansen
Author-Person: pja40
Note: ME
Number: 13932
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13932
File-URL: http://www.nber.org/papers/w13932.pdf
File-Format: application/pdf
Publication-Status: published as Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-45, December.
Abstract: Over the last two decades, communication has become an increasingly important aspect of monetary policy. These real-world developments have spawned a huge new scholarly literature on central bank communication -- mostly empirical, and almost all of it written in this decade. We survey this ever-growing literature. The evidence suggests that communication can be an important and powerful part of the central bank's toolkit since it has the ability to move financial markets, to enhance the predictability of monetary policy decisions, and potentially to help achieve central banks' macroeconomic objectives. However, the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy.
Handle: RePEc:nbr:nberwo:13932
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Variety and the Gains from Trade
Classification-JEL: F10; F12
Author-Name: Costas Arkolakis
Author-Person: par274
Author-Name: Svetlana Demidova
Author-Person: pde534
Author-Name: Peter J. Klenow
Author-Name: Andrés Rodríguez-Clare
Author-Person: pro372
Note: ITI
Number: 13933
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13933
File-URL: http://www.nber.org/papers/w13933.pdf
File-Format: application/pdf
Publication-Status: published as Costas Arkolakis & Svetlana Demidova & Peter J. Klenow & Andres Rodriguez-Clare, 2008. "Endogenous Variety and the Gains from Trade," American Economic Review, American Economic Association, vol. 98(2), pages 444-50, May.
Abstract: We explore the implications of models with increasing returns, endogenous variety and firm-level heterogeneity for the quantification of the gains from trade. We first focus on the impact of trade liberalization on imported variety by analyzing the experience of Costa Rica from 1986 to 1992. We find that although liberalization triggered a sizable increase in variety, the resulting welfare gains were small because of strong heterogeneity across imported goods. Upon trade liberalization, the new varieties are imported in small quantities, and hence contribute little to welfare. We then present a model with firm-level increasing returns, differentiated goods, monopolistic competition, endogenous variety and free entry to show that total variety (domestic plus imported) can either increase, decrease or remain constant with trade liberalization. More importantly, the gains from trade do not depend on what happens to total variety. In fact, we find that, conditional on the estimated elasticities of trade with respect to trade costs, models with increasing returns, endogenous variety, free or restricted entry, and firm-level heterogeneity have exactly the same implications for welfare gains from trade liberalization as traditional models.
Handle: RePEc:nbr:nberwo:13933
Template-Type: ReDIF-Paper 1.0
Title: Econometric Causality
Classification-JEL: B41
Author-Name: James J. Heckman
Note: LS PE
Number: 13934
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13934
File-URL: http://www.nber.org/papers/w13934.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman, 2008. "Econometric Causality," International Statistical Review, International Statistical Institute, vol. 76(1), pages 1-27, 04.
Abstract: This paper presents the econometric approach to causal modeling. It is motivated by policy problems. New causal parameters are defined and identified to address specific policy problems. Economists embrace a scientific approach to causality and model the preferences and choices of agents to infer subjective (agent) evaluations as well as objective outcomes. Anticipated and realized subjective and objective outcomes are distinguished. Models for simultaneous causality are developed. The paper contrasts the Neyman-Rubin model of causality with the econometric approach.
Handle: RePEc:nbr:nberwo:13934
Template-Type: ReDIF-Paper 1.0
Title: Effect of Employer Access to Criminal History Data on the Labor Market Outcomes of Ex-Offenders and Non-Offenders
Classification-JEL: D82; D83; J71; J78; K42
Author-Name: Keith Finlay
Author-Person: pfi85
Note: LS
Number: 13935
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13935
File-URL: http://www.nber.org/papers/w13935.pdf
File-Format: application/pdf
Publication-Status: published as Effect of Employer Access to Criminal History Data on the Labor Market Outcomes of Ex-Offenders and Non-Offenders, Keith Finlay. in Studies of Labor Market Intermediation , Autor. 2009
Abstract: Since 1997, states have begun to make criminal history records publicly available over the Internet. This paper exploits this previously unexamined variation to identify the effect of expanded employer access to criminal history data on the labor market outcomes of ex-offenders and non-offenders. Employers express a strong aversion to hiring ex-offenders, but there is likely asymmetric information about criminal records. Wider availability of criminal history records should adversely affect the labor market outcomes of ex-offenders. A model of statistical discrimination also predicts that non-offenders from groups with high rates of criminal offense should have improved labor market outcomes when criminal history records become more accessible. This paper tests these hypotheses with criminal and labor market histories from the 1997 cohort of the National Longitudinal Survey of Youth. I find evidence that labor market outcomes are worse for ex-offenders once state criminal history records become available over the Internet. Non-offenders from highly offending groups do not appear, however, to have significantly better labor market outcomes. The sign of the non-offenders estimates are consistent with the predictions of the statistical discrimination model, but the estimates are not significantly different from zero. These estimates may be confounded by a short sample period and ongoing human capital investments, but the research design provides a unique setting for testing theories of statistical discrimination.
Handle: RePEc:nbr:nberwo:13935
Template-Type: ReDIF-Paper 1.0
Title: The Consequences of Mortgage Credit Expansion: Evidence from the 2007 Mortgage Default Crisis
Classification-JEL: E44; E51; G21; L85; O51; R21
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: CF
Number: 13936
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13936
File-URL: http://www.nber.org/papers/w13936.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi, 2008. "Summary of "the consequences of mortgage credit expansion"," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 129-132.
Abstract: We demonstrate that a rapid expansion in the supply of mortgages driven by disintermediation explains a large fraction of recent U.S. house price appreciation and subsequent mortgage defaults. We identify the effect of shifts in the supply of mortgage credit by exploiting within-county variation across zip codes that differed in latent demand for mortgages in the mid 1990s. From 2001 to 2005, high latent demand zip codes experienced large relative decreases in denial rates, increases in mortgages originated, and increases in house price appreciation, despite the fact that these zip codes experienced significantly negative relative income and employment growth over this time period. These patterns for high latent demand zip codes were driven by a sharp relative increase in the fraction of loans sold by originators shortly after origination, a process which we refer to as "disintermediation." The increase in disintermediation-driven mortgage supply to high latent demand zip codes from 2001 to 2005 led to subsequent large increases in mortgage defaults from 2005 to 2007. Our results suggest that moral hazard on behalf of originators selling mortgages is a main culprit for the U.S. mortgage default crisis.
Handle: RePEc:nbr:nberwo:13936
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Athletic Performance on Alumni Giving: An Analysis of Micro Data
Classification-JEL: D64; I22
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: Harvey S. Rosen
Author-Person: pro55
Note: ED PE
Number: 13937
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13937
File-URL: http://www.nber.org/papers/w13937.pdf
File-Format: application/pdf
Publication-Status: published as Meer, Jonathan & Rosen, Harvey S., 2009. "The impact of athletic performance on alumni giving: An analysis of microdata," Economics of Education Review, Elsevier, vol. 28(3), pages 287-294, June.
Abstract: An ongoing controversy in the literature on the economics of higher education centers on whether the success of a school's athletic program affects alumni donations. This paper uses a unique data set to investigate this issue. The data contain detailed information about donations made by alumni of a selective research university as well as a variety of their economic and de-mographic characteristics. One important question is how to characterize the success of an athletic program. We focus not only on the performance of the most visible teams, football and basketball, but also on the success of the team on which he or she played as an undergraduate. One of our key findings is that the impact of athletic success on donations differs for men and women. When a male graduate's former team wins its conference championship, his donations for general purposes increase by about 7 percent and his donations to the athletic program increase by about the same percentage. Football and basketball records generally have small and statistically insignificant effects; in some specifications, a winning basketball season reduces donations. For women there is no statistically discernible effect of a former team's success on current giving; as is the case for men, the impacts of football and basketball, while statistically significant in some specifications, are not important in magnitude. Another novel result is that for males, varsity athletes whose teams were successful when they were undergraduates subsequently make larger donations to the athletic program. For example, if a male alumnus's team won its conference championship during his senior year, his subsequent giving to the athletic program is about 8 percent a year higher, ceteris paribus.
Handle: RePEc:nbr:nberwo:13937
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of the Transfer and Renewal of Patents
Classification-JEL: L1; O3
Author-Name: Carlos J. Serrano
Author-Person: pse144
Note: PR
Number: 13938
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13938
File-URL: http://www.nber.org/papers/w13938.pdf
File-Format: application/pdf
Publication-Status: published as Carlos J. Serrano, 2010. "The dynamics of the transfer and renewal of patents," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 686-708.
Abstract: This paper explores the dynamics of the transfer of U.S. patents and the significance of the initial missallocation of patent property rights. Here we find that the initial missallocation of patent property rights is large and differs substantially across patentees and technology fields. We also find that the probability of a patent being traded depends on a number of factors - the age of the patent, the number of citations received by a given age, the patent generality and whether the patent has been previously traded or not. We will also analyze and interpret this new evidence using a theoretical model of patent transfers and renewal.
Handle: RePEc:nbr:nberwo:13938
Template-Type: ReDIF-Paper 1.0
Title: Portraits of the Artist: Personal Visual Art in the Twentieth Century
Classification-JEL: J01
Author-Name: David W. Galenson
Note: LS
Number: 13939
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13939
File-URL: http://www.nber.org/papers/w13939.pdf
File-Format: application/pdf
Publication-Status: published as Portraits of the Artist: Personal Visual Art in the Twentieth Century, David W. Galenson. in Conceptual Revolutions in Twentieth-Century Art, Galenson. 2009
Abstract: Scholars of literature have devoted considerable attention to what they have called confessional or personal poetry, in which Robert Lowell, Sylvia Plath, and a series of other poets, from the 1950s on, made their art out of the experiences of their own lives. Yet art scholars have not analyzed a parallel practice in the visual arts, in which painters and sculptors have used motifs drawn largely or exclusively from their own lives. This practice was begun by Vincent van Gogh in the late nineteenth century, and it subsequently influenced a diverse group of major artists, including such conceptual artists as Edvard Munch, Frida Kahlo, Joseph Beuys, Bruce Nauman, Cindy Sherman, and Tracey Emin, and the experimental artists Francis Bacon and Louise Bourgeois. Although van Gogh did not think of his practice of painting himself and the people and things he cared most about as novel, others soon recognized it as an innovation that would help them to achieve their artistic goals, and personal art became a distinctive feature of the advanced art of the twentieth century. That personal art first appeared in the late nineteenth century, and became more common in the twentieth, reflects the increased autonomy of painters that was a consequence of the development of a competitive market for advanced art after the Impressionists' successful challenge to the monopoly of the official Salon.
Handle: RePEc:nbr:nberwo:13939
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Crises since 1870
Classification-JEL: E01; E21; E23; E44; G12
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: José F. Ursúa
Note: EFG ME PE AP
Number: 13940
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13940
File-URL: http://www.nber.org/papers/w13940.pdf
File-Format: application/pdf
Publication-Status: published as Robert J. Barro & Jose F. Ursua, 2008. "Macroeconomic Crises since 1870," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 255-350.
Abstract: We build on the Maddison GDP data to assemble international time series from before 1914 on real per capita personal consumer expenditure, C. We also improve the GDP data in many cases. The C variable comes closer than GDP to the consumption concept that enters into usual asset-pricing equations. (A separation of consumer expenditure into durables and non-durables is feasible for only a minority of cases.) We have essentially full annual data on C for 22 countries and GDP for 35 countries, and we plan to complete the long-term time series for a few more countries. For samples that start as early as 1870, we apply a peak-to-trough method for each country to isolate economic crises, defined as cumulative declines in C or GDP by at least 10%. The principal world economic crises ranked by importance are World War II, World War I and the Great Depression, the early 1920s (possibly reflecting the influenza epidemic of 1918-20), and post-World War II events such as the Latin American debt crisis and the Asian financial crisis. We find 87 crises for C and 148 for GDP, implying disaster probabilities around 3.6% per year. The disaster size has a mean of 21-22% and an average duration of 3.5 years. A comparison of C and GDP declines shows roughly coincident timing. The average fractional decline in C exceeds that in GDP during wartime crises but is similar for non-war crises. We simulate a Lucas-tree model with i.i.d. growth shocks and Epstein-Zin-Weil preferences. This simulation accords with the observed average equity premium of around 7% on levered equity, using a "reasonable" coefficient of relative risk aversion of 3.5. This result is robust to a number of perturbations, except for limiting the sample to non-war crises, a selection that eliminates most of the largest declines in C and GDP. We plan a statistical analysis that uses all the time-series data and includes estimation of long-run effects of crises on levels and growth rates of C and GDP. We will also study the bond-bill premium (empirically around 1%) and allow for time-varying disaster probabilities.
Handle: RePEc:nbr:nberwo:13940
Template-Type: ReDIF-Paper 1.0
Title: Consistent Cell Means for Topcoded Incomes in the Public Use March CPS (1976-2007)
Classification-JEL: C8; D3; J3
Author-Name: Jeff Larrimore
Author-Person: pla377
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Shuaizhang Feng
Author-Name: Laura Zayatz
Note: LS PE TWP
Number: 13941
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13941
File-URL: http://www.nber.org/papers/w13941.pdf
File-Format: application/pdf
Publication-Status: published as Larrimore, Jeff, Richard V. Burkhauser, Shuaizhang Feng and Laura Zayatz. “Consistent Cell Means for Topcoded Incomes in the Public Use March CPS (1976 - 2007).” Journal of Economic and Social Measurement , 33 (2 - 3) (2008): 89 - 128
Abstract: Using the internal March CPS, we create and in this paper distribute to the larger research community a cell mean series that provides the mean of all income values above the topcode for any income source of any individual in the public use March CPS that has been topcoded since 1976. We also describeour construction of this series. When we use this series together with the public use March CPS, we closely match the yearly mean income levels and income inequalities of the U.S. population found using the internal March CPS data.
Handle: RePEc:nbr:nberwo:13941
Template-Type: ReDIF-Paper 1.0
Title: Exporting Deflation? Chinese Exports and Japanese Prices
Classification-JEL: E31; F1; F12
Author-Name: David Weinstein
Author-Person: pwe34
Author-Name: Christian Broda
Note: ITI
Number: 13942
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13942
File-URL: http://www.nber.org/papers/w13942.pdf
File-Format: application/pdf
Publication-Status: published as Exporting Deflation? Chinese Exports and Japanese Prices, Christian Broda, David E. Weinstein. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: Between 1992 and 2002, the Japanese Import Price Index registered a decline of almost 9 percent and Japan entered a period of deflation. We show that much of the correlation between import prices and domestic prices was due to formula biases. Had the IPI been computed using a pure Laspeyres index like the CPI, the IPI would have hardly moved at all. A Laspeyres version of the IPI would have risen 1 percentage point per year faster than the official index. Second we show that Chinese prices did not behave differently from the prices of other importers. Although Chinese prices are substantially lower than the prices of other exporters, they do not exhibit a differential trend. However, we estimate that the typical price per unit quality of a Chinese exporter fell by half between 1992 and 2005. Thus the explosive growth in Chinese exports is attributable to growth in the quality of Chinese exports and the increase in new products being exported by China.
Handle: RePEc:nbr:nberwo:13942
Template-Type: ReDIF-Paper 1.0
Title: A Black Swan in the Money Market
Classification-JEL: E43; E44; E52
Author-Name: John B. Taylor
Author-Person: pta174
Author-Name: John C. Williams
Author-Person: pwi23
Note: AP EFG IFM ME
Number: 13943
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13943
File-URL: http://www.nber.org/papers/w13943.pdf
File-Format: application/pdf
Publication-Status: published as John B. Taylor & John C. Williams, 2009. "A Black Swan in the Money Market," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 58-83, January.
Publication-Status: published as John B. Taylor & John C. Williams, 2009. "A black swan in the money market," Proceedings, Federal Reserve Bank of San Francisco, issue Jan.
Abstract: At the center of the financial market crisis of 2007-2008 was a highly unusual jump in spreads between the overnight inter-bank lending rate and term London inter-bank offer rates (Libor). Because many private loans are linked to Libor rates, the sharp increase in these spreads raised the cost of borrowing and interfered with monetary policy. The widening spreads became a major focus of the Federal Reserve, which took several actions -- including the introduction of a new term auction facility (TAF) --- to reduce them. This paper documents these developments and, using a no-arbitrage model of the term structure, tests various explanations, including increased risk and greater liquidity demands, while controlling for expectations of future interest rates. We show that increased counterparty risk between banks contributed to the rise in spreads and find no empirical evidence that the TAF has reduced spreads. The results have implications for monetary policy and financial economics.
Handle: RePEc:nbr:nberwo:13943
Template-Type: ReDIF-Paper 1.0
Title: Do Funds-of-Funds Deserve Their Fees-on-Fees?
Classification-JEL: G11; G12
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Matthew Rhodes-Kropf
Author-Person: prh19
Author-Name: Rui Zhao
Author-Person: pzh281
Note: AP
Number: 13944
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13944
File-URL: http://www.nber.org/papers/w13944.pdf
File-Format: application/pdf
Abstract: Since the after-fee returns of funds-of-funds are, on average, lower than hedge fund returns, it is easy to conclude that funds-of-funds do not add value compared to hedge funds. However, funds-of-funds should not be evaluated relative to hedge fund returns in publicly reported databases. Instead, the correct fund-of-funds benchmark is the set of direct hedge fund investments an investor could achieve on her own without recourse to funds-of-funds. We use asset allocation concepts to estimate characteristics of the fund-of-funds benchmark distribution. Since the benchmark characteristics are reasonable, we conclude that funds-of-funds, on average, deserve their fees-on-fees.
Handle: RePEc:nbr:nberwo:13944
Template-Type: ReDIF-Paper 1.0
Title: Bribery or Just Desserts? Evidence on the Influence of Congressional Voting Patterns on PAC Contributions from Exogenous Variation in the Sex Mix of Legislator Offspring
Classification-JEL: H11; J18; K0
Author-Name: Dalton Conley
Author-Name: Brian J. McCabe
Note: PE POL
Number: 13945
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13945
File-URL: http://www.nber.org/papers/w13945.pdf
File-Format: application/pdf
Publication-Status: published as Dalton Conley & Brian J. McCabe, 2012. "Bribery or just desserts? Evidence on the influence of Congressional reproductive policy voting patterns on PAC contributions from exogenous variation in the sex mix of legislator offspring," Social Science Research, vol 41(1), pages 120-129.
Abstract: Evidence on the relationship between political contributions and legislators' voting behavior is marred by concerns about endogeneity in the estimation process. Using a legislator's offspring sex mix as an exogenous variable, we employ a two-stage least squares estimation procedure to predict the effect of voting behavior on political contributions. Following previous research, we find that a legislator's proportion daughters has a significant effect on voting behavior for women's issues, as measured by score in the "Congressional Record on Choice" issued by NARAL Pro-Choice America. In the second stage, we make a unique contribution by demonstrating a significant impact of exogenous voting behavior on PAC contributions, lending credibility to the hypothesis that Political Action Committees respond to legislators' voting patterns by "rewarding" political candidates that vote in line with the positions of the PAC, rather than affecting or "bribing" those same votes -- at least in this high profile policy domain.
Handle: RePEc:nbr:nberwo:13945
Template-Type: ReDIF-Paper 1.0
Title: The Forgotten History of Domestic Debt
Classification-JEL: E6; F3; N0
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM PE
Number: 13946
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13946
File-URL: http://www.nber.org/papers/w13946.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "The Forgotten History of Domestic Debt," Economic Journal, Royal Economic Society, vol. 121(552), pages 319-350, 05.
Abstract: There is a rich scholarly literature on sovereign default on external debt. Comparatively little is known about sovereign defaults on domestic debt. Even today, cross-country data on domestic public debt remains curiously exotic, particularly prior to the 1980s. We have filled this gap in the literature by compiling a database on central government public debt (external and domestic). The data span 1914 to 2007 for most countries, reaching back into the nineteenth century for many. Our findings on debt sustainability, sovereign defaults, the temptation to inflate, and the hierarchy of creditors only scratch the surface of what the domestic public debt data can reveal. First, domestic debt is big -- for the 64 countries for which we have long time series, domestic debt accounts for almost two-thirds of total public debt. For most of the sample, this debt carries a market interest rate (except for the financial repression era between WWII and financial liberalization). Second, the data go a long ways toward explaining the puzzle of why countries so often default on their external debts at seemingly low debt thresholds. Third, domestic debt has largely been ignored in the vast empirical work on inflation. In fact, domestic debt (a significant portion of which is long term and non-indexed) is often much larger than the monetary base in the run-up to high inflation episodes. Last, the widely-held view that domestic residents are strictly junior to external creditors does not find broad support.
Handle: RePEc:nbr:nberwo:13946
Template-Type: ReDIF-Paper 1.0
Title: Life Expectancy and Human Capital Investments: Evidence From Maternal Mortality Declines
Classification-JEL: I10; I20; O15
Author-Name: Seema Jayachandran
Author-Person: pja86
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Note: CH EH ED
Number: 13947
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13947
File-URL: http://www.nber.org/papers/w13947.pdf
File-Format: application/pdf
Publication-Status: published as Seema Jayachandran & Adriana Lleras-Muney, 2009. "Life Expectancy and Human Capital Investments: Evidence from Maternal Mortality Declines-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 349-397, February.
Abstract: Longer life expectancy should encourage human capital accumulation, since a longer time horizon increases the value of investments that pay out over time. Previous work has been unable to determine the empirical importance of this life-expectancy effect due to the difficulty of isolating it from other effects of health on education. We examine a sudden drop in maternal mortality risk in Sri Lanka between 1946 and 1953, which creates a sharp increase in life expectancy for school-age girls without contemporaneous effects on health, and which also allows for the use of boys as a control group. Using additional geographic variation, we find that the 70% reduction in maternal mortality risk over the sample period increased female life expectancy at age 15 by 4.1%, female literacy by 2.5%, and female years of education by 4.0%.
Handle: RePEc:nbr:nberwo:13947
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Macroeconomic Performance, and Monetary Policy
Classification-JEL: E52; F41
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME IFM
Number: 13948
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13948
File-URL: http://www.nber.org/papers/w13948.pdf
File-Format: application/pdf
Publication-Status: published as Frederic S. Mishkin, 2009. "Globalization, Macroeconomic Performance, and Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(s1), pages 187-196, 02.
Publication-Status: published as Frederic S. Mishkin, 2008. "Globalization, macroeconomic performance, and monetary policy," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
Abstract: The paper argues that many of the exaggerated claims that globalization has been an important factor in lowering inflation in recent years just do not hold up. Globalization does, however, have the potential to be stabilizing for individual economies and has been a key factor in promoting economic growth. The paper then examines four questions about the impact of globalization on the monetary transmission mechanism and arrives at the following answers: (1) Has globalization led to a decline in the sensitivity of inflation to domestic output gaps and thus to domestic monetary policy? No. (2) Are foreign output gaps playing a more prominent role in the domestic inflation process, so that domestic monetary policy has more difficulty stabilizing inflation? No. (3) Can domestic monetary policy still control domestic interest rates and so stabilize both inflation and output? Yes. (4) Are there other ways, besides possible influences on inflation and interest rates, in which globalization may have affected the transmission mechanism of monetary policy? Yes.
Handle: RePEc:nbr:nberwo:13948
Template-Type: ReDIF-Paper 1.0
Title: Nonparametric Identification and Estimation in a Generalized Roy Model
Classification-JEL: C1; C13; C14; J24; J3; J32
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Shakeeb Khan
Author-Person: pkh401
Author-Name: Christopher Timmins
Note: LS TWP
Number: 13949
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13949
File-URL: http://www.nber.org/papers/w13949.pdf
File-Format: application/pdf
Abstract: This paper considers nonparametric identification and estimation of a generalized Roy model that includes a non-pecuniary component of utility associated with each choice alternative. Previous work has found that, without parametric restrictions or the availability of covariates, all of the useful content of a cross-sectional dataset is absorbed in a restrictive specification of Roy sorting behavior that imposes independence on wage draws. While this is true, we demonstrate that it is also possible to identify (under relatively innocuous assumptions and without the use of covariates) a common non-pecuniary component of utility associated with each choice alternative. We develop nonparametric estimators corresponding to two alternative assumptions under which we prove identification, derive asymptotic properties, and illustrate small sample properties with a series of Monte Carlo experiments. We demonstrate the usefulness of one of these estimators with an empirical application. Micro data from the 2000 Census are used to calculate the returns to a college education. If high-school and college graduates face different costs of migration, this would be reflected in different degrees of Roy-sorting-induced bias in their observed wage distributions. Correcting for this bias, the observed returns to a college degree are cut in half.
Handle: RePEc:nbr:nberwo:13949
Template-Type: ReDIF-Paper 1.0
Title: Trevor Swan And The Neoclassical Growth Model
Classification-JEL: B2; B3; B4; O41
Author-Name: Robert W. Dimand
Author-Person: pdi197
Author-Name: Barbara J. Spencer
Author-Person: psp2
Note: EFG
Number: 13950
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13950
File-URL: http://www.nber.org/papers/w13950.pdf
File-Format: application/pdf
Publication-Status: published as Robert W. Dimand & Barbara J. Spencer, 2009. "Trevor Swan and the Neoclassical Growth Model," History of Political Economy, Duke University Press, vol. 41(5), pages 107-126, Supplemen.
Abstract: Trevor Swan independently developed the neoclassical growth model. Swan (1956) was published ten months later than Solow (1956), but included a more complete analysis of technical progress, which Solow treated separately in Solow (1957). Reference is sometimes made to the "Solow-Swan growth model", but more commonly reference is made only to the "Solow growth model". This paper examines the history of Swan's development of the growth model, the similarities and differences between the approaches of Swan and Solow and the reasons why Swan's contribution has been overshadowed. We draw on unpublished work to show that in 1950, Swan was working on a growth model in a verbal format. In 1956, Swan published only a simplified version of his model based on a Cobb-Douglas production function, but Swan's original model (circulated July 1956 and published posthumously in 2002) was much more general. Swan's reluctance to publish was consistent with his perhaps counterproductive modesty and perfectionism. His well known paper, "Longer run problems of the Balance of Payments" was circulated in 1955, eight years before publication in 1963. His pioneering work in 1945, developing the first macroeconomic model of the Australian economy, was published posthumously in 1989.
Handle: RePEc:nbr:nberwo:13950
Template-Type: ReDIF-Paper 1.0
Title: Beyond Signaling and Human Capital: Education and the Revelation of Ability
Classification-JEL: J15; J24; J3; J7
Author-Name: Peter Arcidiacono
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Aurel Hizmo
Note: ED LS
Number: 13951
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13951
File-URL: http://www.nber.org/papers/w13951.pdf
File-Format: application/pdf
Publication-Status: published as Peter Arcidiacono & Patrick Bayer & Aurel Hizmo, 2010. "Beyond Signaling and Human Capital: Education and the Revelation of Ability," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 76-104, October.
Abstract: In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this paper, we provide evidence that education (specifically, attending college) plays a much more direct role in revealing ability to the labor market. We use the NLSY79 to examine returns to ability early in careers; our results suggest that ability is observed nearly perfectly for college graduates but is revealed to the labor market much more gradually for high school graduates. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially completely unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find no racial differences in wages or returns to ability in the college labor market, but a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market. That blacks face a wage penalty in the high school but not the college labor market also helps to explains why, conditional on ability, blacks are more likely to earn a college degree, a fact that has been documented in the literature but for which a full explanation has yet to emerge.
Handle: RePEc:nbr:nberwo:13951
Template-Type: ReDIF-Paper 1.0
Title: Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate
Classification-JEL: F1; F3
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: IFM ITI
Number: 13952
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13952
File-URL: http://www.nber.org/papers/w13952.pdf
File-Format: application/pdf
Publication-Status: published as Martin Feldstein, 2008. "Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 113-25, Summer.
Abstract: The large trade and current account deficits of the United States cannot continue indefinitely because doing so would constitute a permanent gift to the U.S. economy. The process that will cause this gift to shrink and that will eventually cause it to reverse is a fall in the dollar. The dollar will fall as private investors and governments become unwilling to accept the risk of increasing amounts of dollars in their portfolios, especially in a context in which they realize that the dollar must fall to reduce the trade imbalance. Although a more competitive dollar is the mechanism that will cause the U.S. trade deficit to decline, the fundamental requirement for a lower trade deficit is an increase in the U.S. national saving rate. So a rise will be driven by higher household savings of the coming years as the two primary forces that depressed savings in recent years are reversed: the exceptionally rapid rise in household wealth and the high level of mortgage refinancing with equity withdrawal.
Handle: RePEc:nbr:nberwo:13952
Template-Type: ReDIF-Paper 1.0
Title: Did Wages Reflect Growth in Productivity?
Classification-JEL: E24; J3
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG LS PR
Number: 13953
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13953
File-URL: http://www.nber.org/papers/w13953.pdf
File-Format: application/pdf
Publication-Status: published as Feldstein, Martin, 2008. "Did wages reflect growth in productivity?," Journal of Policy Modeling, Elsevier, vol. 30(4), pages 591-594.
Abstract: The level of productivity doubled in the U.S. nonfarm business sector between 1970 and 2006. Wages, or more accurately total compensation per hour, increased at approximately the same annual rate during that period if nominal compensation is adjusted for inflation in the same way as the nominal output measure that is used to calculate productivity. Total employee compensation as a share of national income was 66 percent of national income in 1970 and 64 percent in 2006. This measure of the labor compensation share has been remarkably stable since the 1970s. It rose from an average of 62 percent in the decade of the 1960s to 66 percent in the decades of the 1970s and 1980s and then declined to 65 percent in the decade of the 1990s where it has again been from 2000 until the most recent quarter.
Handle: RePEc:nbr:nberwo:13953
Template-Type: ReDIF-Paper 1.0
Title: On the Potential of Neuroeconomics: A Critical (but Hopeful) Appraisal
Classification-JEL: D01; D60; D87
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Note: PE
Number: 13954
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13954
File-URL: http://www.nber.org/papers/w13954.pdf
File-Format: application/pdf
Publication-Status: published as B. Douglas Bernheim, 2009. "On the Potential of Neuroeconomics: A Critical (but Hopeful) Appraisal," American Economic Journal: Microeconomics, American Economic Association, vol. 1(2), pages 1-41, August.
Abstract: This paper evaluates the prospects for the emerging field of neuroeconomics to shed light on traditional positive and normative economic questions. It argues that the potential for meaningful contributions, though often misunderstood and frequently overstated, is nevertheless present.
Handle: RePEc:nbr:nberwo:13954
Template-Type: ReDIF-Paper 1.0
Title: Competing Liquidities: Corporate Securities, Real Bonds and Bubbles
Classification-JEL: E2; E44
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Jean Tirole
Author-Person: pti33
Note: EFG PE
Number: 13955
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13955
File-URL: http://www.nber.org/papers/w13955.pdf
File-Format: application/pdf
Publication-Status: published as “ Bubbly Liquidity” (with Jean Tirole) Review of Economic Studies, February 2012, vol 79 (2)
Abstract: We explore the link between liquidity and investment in a an overlapping generation model with a standard asynchronicity between firms' access to and need for cash. Imperfect pledgeability hinders the capacity of capital markets to resolve this asynchronicity, resulting in credit rationing and a net demand for stores of value -- liquidity -- by the corporate sector. At the heart of the model is a distinction between inside liquidity -- liquidity created within the private sector -- and outside liquidity -- assets that do not originate in private investment decisions. In the model, outside liquidity comes in two forms: rents and asset bubbles. We make four contributions. First, we show that imperfect pledgeability severs the link between dynamic efficiency and the level of the interest rate. Bubbles are possible even when the economy is dynamically efficient. Second, we demonstrate that the link between outside liquidity and investment is ambiguous: on the one hand, outside liquidity eases the asynchronicity problem of firms, boosting investment -- the liquidity effect; on the other hand it competes with inside liquidity, reduces the value of firms' collateral and lowers investment -- the competition effect. We characterize precisely the conditions under which outside liquidity and investment are complements or substitutes. Third, we explore the possibility of stochastic bubbles. We show that they trade at a liquidity discount. Bubble bursts can be endogenously triggered by bad shocks to corporate balance sheets and have potentially amplified effects on investment through liquidity dry-ups. Fourth, in an extension where corporate governance is endogenously determined by a trade-off striked by firms between collateral and value, we show that bubbles are accompanied by loose corporate governance.
Handle: RePEc:nbr:nberwo:13955
Template-Type: ReDIF-Paper 1.0
Title: The Struggle for Palestinian Hearts and Minds: Violence and Public Opinion in the Second Intifada
Classification-JEL: D72; D74; D86; D89; H56; H71
Author-Name: David A. Jaeger
Author-Person: pja17
Author-Name: Esteban F. Klor
Author-Person: pkl15
Author-Name: Sami H. Miaari
Author-Name: M. Daniele Paserman
Author-Person: ppa129
Note: PE POL
Number: 13956
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13956
File-URL: http://www.nber.org/papers/w13956.pdf
File-Format: application/pdf
Publication-Status: published as Jaeger, David A. & Klor, Esteban F. & Miaari, Sami H. & Paserman, M. Daniele, 2012. "The struggle for Palestinian hearts and minds: Violence and public opinion in the Second Intifada," Journal of Public Economics, Elsevier, vol. 96(3), pages 354-368.
Abstract: his paper examines how violence in the Second Intifada influences Palestinian public opinion. Using micro data from a series of opinion polls linked to data on fatalities, we find that Israeli violence against Palestinians leads them to support more radical factions and more radical attitudes towards the conflict. This effect is temporary, however, and vanishes completely within 90 days. We also find some evidence that Palestinian fatalities lead to the polarization of the population and to increased disaffection and a lack of support for any faction. Geographically proximate Palestinian fatalities have a larger effect than those that are distant, while Palestinian fatalities in targeted killings have a smaller effect relative to other fatalities. Although overall Israeli fatalities do not seem to affect Palestinian public opinion, when we divide those fatalities by the different factions claiming responsibility for them, we find some evidence that increased Israeli fatalities are effective in increasing support for the faction that claimed them.
Handle: RePEc:nbr:nberwo:13956
Template-Type: ReDIF-Paper 1.0
Title: The Inside Scoop: Acceptance and Rejection at the Journal of International Economics
Classification-JEL: F0
Author-Name: Ivan Cherkashin
Author-Name: Svetlana Demidova
Author-Person: pde534
Author-Name: Susumu Imai
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ITI
Number: 13957
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13957
File-URL: http://www.nber.org/papers/w13957.pdf
File-Format: application/pdf
Publication-Status: published as Cherkashin, Ivan & Demidova, Svetlana & Imai, Susumu & Krishna, Kala, 2009. "The inside scoop: Acceptance and rejection at the journal of international economics," Journal of International Economics, Elsevier, vol. 77(1), pages 120-132, February.
Abstract: There is little work on the inner workings of journals. What factors seem to affect the ability to publish in a journal? Could simple rules (which are already used by some journals) like the desk rejection of a significant minority of papers, help to streamline the process? At what cost? How well do journals seem to do in choosing papers? What can we say about the extent of type 1 and type 2 errors? Do editors seem to have uniform standards or are some harsher than others? We use data on submissions to the Journal of International Economics to help answer these questions.
Handle: RePEc:nbr:nberwo:13957
Template-Type: ReDIF-Paper 1.0
Title: Agricultural Trade Reform and Rural Prosperity: Lessons from China
Classification-JEL: F1; O1; Q17; Q18
Author-Name: Jikun Huang
Author-Person: phu352
Author-Name: Yu Liu
Author-Name: Will Martin
Author-Person: pma551
Author-Name: Scott Rozelle
Author-Person: pro707
Note: ITI
Number: 13958
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13958
File-URL: http://www.nber.org/papers/w13958.pdf
File-Format: application/pdf
Publication-Status: published as Agricultural Trade Reform and Rural Prosperity: Lessons from China, Jikun Huang, Yu Liu, Will Martin, Scott Rozelle. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: Tariffs on agricultural products fell sharply in China both prior to, and as a consequence of, China's accession to the WTO. The paper examines the nature of agricultural trade reform in China since 1981, and finds that protection was quite strongly negative for most commodities, and particularly for exported goods, at the beginning of the reforms. Since then, the taxation of agriculture has declined sharply, with the abolition of production quotas and procurement pricing, and reductions in trade distortions for both imported and exported goods. Rural well-being has improved partly because of these reforms, and also because of strengthening of markets, public investment in infrastructure, research and development, health and education, and reductions in barriers to mobility of labor out of agriculture. Many challenges remain in improving rural incomes and reducing rural poverty.
Handle: RePEc:nbr:nberwo:13958
Template-Type: ReDIF-Paper 1.0
Title: Productivity Growth, Knowledge Flows, and Spillovers
Classification-JEL: F23; O47; O57
Author-Name: Gustavo Crespi
Author-Person: pcr58
Author-Name: Chiara Criscuolo
Author-Person: pcr53
Author-Name: Jonathan E. Haskel
Author-Person: pha161
Author-Name: Matthew Slaughter
Note: IO ITI PR
Number: 13959
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13959
File-URL: http://www.nber.org/papers/w13959.pdf
File-Format: application/pdf
Abstract: This paper explores the role of knowledge flows and productivity growth by linking direct survey data on knowledge flows to firm-level data on TFP growth. Our data measure the information flows often considered important, especially by policy-makers, such as from within the firm and from suppliers, customers, and competitors. We examine (a) what are the empirically important sources of knowledge flows? (b) to what extent do such flows contribute to TFP growth? (c) do such flows constitute a spillover of free knowledge? (d) how do such flows correspond to suggested spillover sources, such as multinational or R&D presence? We find that: (a) the main sources of knowledge are competitors; suppliers; and plants that belong to the same business group ; (b) these three flows together account for about 50% of TFP growth; (c) the main "free" information flow spillover is from competitors; and (d) multinational presence contributes to this spillover.
Handle: RePEc:nbr:nberwo:13959
Template-Type: ReDIF-Paper 1.0
Title: Contracting in the Shadow of the Law
Classification-JEL: D02; K12; L23
Author-Name: Surajeet Chakravarty
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Note: LE LS
Number: 13960
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13960
File-URL: http://www.nber.org/papers/w13960.pdf
File-Format: application/pdf
Publication-Status: published as Surajeet Chakravarty & W. Bentley MacLeod, 2009. "Contracting in the shadow of the law," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 533-557.
Abstract: Economic models of contract typically assume that courts enforce obligations based on verifiable events (corresponding to the legal rule of specific performance). As a matter of law, this is not the case. This leaves open the question of optimal contract design given the available remedies used by the courts. This paper shows that American standard form construction contracts can be viewed as an efficient mechanism for implementing building projects given existing legal rules. It is shown that a central feature of these contracts is the inclusion of governance covenants that shape the scope of authority, and regulate the ex post bargaining power of parties. Our model also implies that the legal remedies of mistake, impossibility and the doctrine limiting damages for unforeseen events developed in the case of Hadley vs. Baxendale are efficient solutions to the problem of implementing complex exchange.
Handle: RePEc:nbr:nberwo:13960
Template-Type: ReDIF-Paper 1.0
Title: Institutions and Contract Enforcement
Classification-JEL: C9; D01; J3; J41
Author-Name: Armin Falk
Author-Person: pfa48
Author-Name: David Huffman
Author-Person: phu45
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Note: LE LS
Number: 13961
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13961
File-URL: http://www.nber.org/papers/w13961.pdf
File-Format: application/pdf
Publication-Status: published as Armin Falk & David Huffman & W. Bentley Macleod, 2015. "Institutions and Contract Enforcement," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 571 - 590.
Abstract: We provide evidence on how two important types of institutions -- dismissal barriers, and bonus pay -- affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and market efficiency, by interfering with firms' use of firing threat as an incentive device. Dismissal barriers also distort the dynamics of worker effort levels over time, cause firms to rely more on the spot market for labor, and create a distribution of relationship lengths in the market that is more extreme, with more very short and more very long relationships. The introduction of a bonus pay option dramatically changes the market outcome. Firms are observed to substitute bonus pay for threat of firing as an incentive device, almost entirely offsetting the negative incentive and efficiency effects of dismissal barriers. Nevertheless, contract enforcement behavior remains fundamentally changed, because the option to pay bonuses causes firms to rely less on long-term relationships. Our results show that market outcomes are the result of a complex interplay between contract enforcement policies and the institutions in which they are embedded.
Handle: RePEc:nbr:nberwo:13961
Template-Type: ReDIF-Paper 1.0
Title: Derivatives Markets for Home Prices
Classification-JEL: G13; R31
Author-Name: Robert J. Shiller
Author-Person: psh69
Note: AP
Number: 13962
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13962
File-URL: http://www.nber.org/papers/w13962.pdf
File-Format: application/pdf
Abstract: The establishment recently of risk management vehicles for home prices is described. The potential value of such vehicles, once they become established, is seen in consideration of the inefficiency of the market for single family homes. Institutional changes that might derive from the establishment of these new markets are described. An important reason for these beginnings of real estate derivative markets is the advance in home price index construction methods, notably the repeat sales method, that have appeared over the last twenty years. Psychological barriers to the full success of such markets are discussed.
Handle: RePEc:nbr:nberwo:13962
Template-Type: ReDIF-Paper 1.0
Title: China's Local Comparative Advantage
Classification-JEL: F1; F14
Author-Name: James Harrigan
Author-Person: pha151
Author-Name: Haiyan Deng
Note: ITI
Number: 13963
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13963
File-URL: http://www.nber.org/papers/w13963.pdf
File-Format: application/pdf
Publication-Status: published as China's Local Comparative Advantage, James Harrigan, Haiyan Deng. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: China's trade pattern is influenced not just by its overall comparative advantage in labor intensive goods but also by geography. We use two variants of the Eaton-Kortum (2002) model to study China's local comparative advantage. The theory predicts that China's share of export markets should grow most rapidly where China's share is initially large. A corollary is that exporters that have a big market share where China's share is initially large should see the largest fall in their market shares. These market share change predictions are strongly supported in the data from 1996 to 2006. We also show theoretically that since trade costs are proportional to weight rather than value, relative distance affects local comparative advantage as well as the overall volume of trade. The model predicts that China has a comparative advantage in heavy goods in nearby markets, and lighter goods in more distant markets. This theory motivates a simple empirical prediction: within a product, China's export unit values should be increasing in distance. We find strong support for this effect in our empirical analysis on product-level Chinese exports in 2006.
Handle: RePEc:nbr:nberwo:13963
Template-Type: ReDIF-Paper 1.0
Title: Conflict and Deterrence under Strategic Risk
Classification-JEL: C72; C73; D74
Author-Name: Sylvain Chassang
Author-Name: Gerard Padro i Miquel
Note: POL
Number: 13964
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13964
File-URL: http://www.nber.org/papers/w13964.pdf
File-Format: application/pdf
Publication-Status: published as Sylvain Chassang & Gerard Padró i Miquel, 2010. "Conflict and Deterrence under Strategic Risk," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1821-1858, November.
Abstract: We examine the mechanics of deterrence and intervention when fear is a motive for conflict. We contrast results obtained in a complete information setting, where coordination is easy, to those obtained in a setting with strategic risk, where players have different assessments of their environment. These two strategic settings allow us to define and distinguish predatory and preemptive incentives as determinants of conflict. We show that while weapons have an unambiguous deterrent effect under complete information, this does not hold anymore under strategic risk. Rather, we find that increases in weapon stocks can have a non-monotonic effect on the sustainability of peace. We also show that under strategic risk, inequality in military strength can ac- tually facilitate peace and that anticipated peace-keeping interventions may improve incentives for peaceful behavior.
Handle: RePEc:nbr:nberwo:13964
Template-Type: ReDIF-Paper 1.0
Title: Pass-Through in Retail and Wholesale
Classification-JEL: E30; F40; L16; L81
Author-Name: Emi Nakamura
Author-Person: pna121
Note: IFM IO ME
Number: 13965
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13965
File-URL: http://www.nber.org/papers/w13965.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura, 2008. "Pass-Through in Retail and Wholesale," American Economic Review, American Economic Association, vol. 98(2), pages 430-37, May.
Abstract: This paper studies how prices comove across products, firms and locations to gauge the relative importance of retailer versus manufacturer-level shocks in determining prices. I make use of a large panel data set on prices for a cross-section of retailers in the U.S. I analyze prices at the barcode or "Universal Product Code'' (UPC) level for individual stores. I find that only 16% of the variation in prices is common across stores selling an identical product. 65% of the price variation is common to stores within a particular retail chain (but not across retail chains), while 17% is completely idiosyncratic to the store and product. Product categories with frequent temporary "sales'' exhibit a disproportionate amount of completely idiosyncratic price variation. My results suggest that most of the observed price variation arises from retail-level rather than manufacturer-level demand and supply shocks. However, the behavior of prices is difficult to relate to observed variation in costs and demand at the retail level. This suggests that retail prices may vary largely as a consequence of dynamic pricing strategies on the part of retailers or manufacturers, rather than static demand and supply shocks.
Handle: RePEc:nbr:nberwo:13965
Template-Type: ReDIF-Paper 1.0
Title: Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds
Classification-JEL: D1; D91; E21; G11; G2; G23; H31; H55
Author-Name: Francisco J. Gomes
Author-Person: pgo69
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Luis M. Viceira
Author-Person: pvi31
Note: AG AP PE
Number: 13966
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13966
File-URL: http://www.nber.org/papers/w13966.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Gomes & Laurence J. Kotlikoff & Luis M. Viceira, 2008. "Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds," American Economic Review, American Economic Association, vol. 98(2), pages 297-303, May.
Abstract: We investigate optimal consumption, asset accumulation and portfolio decisions in a realistically calibrated life-cycle model with flexible labor supply. Our framework allows for wage rate uncertainly, variable labor supply, social security benefits and portfolio choice over safe bonds and risky equities. Our analysis reinforces prior findings that equities are the preferred asset for young households, with the optimal share of equities generally declining prior to retirement. However, variable labor materially alters pre-retirement portfolio choice by significantly raising optimal equity holdings. Using this model, we also investigate the welfare costs of constraining portfolio allocations over the life cycle to mimic popular default investment choices in defined-contribution pension plans, such as stable value funds, balanced funds, and life-cycle (or target date) funds. We find that life-cycle funds designed to match the risk tolerance and investment horizon of investors have small welfare costs. All other choices, including life-cycle funds which do not match investors' risk tolerance, can have substantial welfare costs.
Handle: RePEc:nbr:nberwo:13966
Template-Type: ReDIF-Paper 1.0
Title: Moral Hazard vs. Liquidity and Optimal Unemployment Insurance
Classification-JEL: H0; J6
Author-Name: Raj Chetty
Author-Person: pch161
Note: EFG LS PE
Number: 13967
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13967
File-URL: http://www.nber.org/papers/w13967.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, 04.
Abstract: This paper presents new evidence on why unemployment insurance (UI) benefits affect search behavior and develops a simple method of calculating the welfare gains from UI using this evidence. I show that 60 percent of the increase in unemployment durations caused by UI benefits is due to a "liquidity effect" rather than distortions in marginal incentives to search ("moral hazard") by combining two empirical strategies. First, I find that increases in benefits have much larger effects on durations for liquidity constrained households. Second, lump-sum severance payments increase durations substantially among constrained households. I derive a formula for the optimal benefit level that depends only on the reduced-form liquidity and moral hazard elasticities. The formula implies that the optimal UI benefit level exceeds 50 percent of the wage. The "exact identification" approach to welfare analysis proposed here yields robust optimal policy results because it does not require structural estimation of primitives.
Handle: RePEc:nbr:nberwo:13967
Template-Type: ReDIF-Paper 1.0
Title: National Cultures and Soccer Violence
Classification-JEL: K0; O57; Z1
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Sebastián M. Saiegh
Author-Name: Shanker Satyanath
Note: EFG LE POL
Number: 13968
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13968
File-URL: http://www.nber.org/papers/w13968.pdf
File-Format: application/pdf
Abstract: Can some acts of violence be explained by a society's "culture"? Scholars have found it hard to empirically disentangle the effects of culture, legal institutions, and poverty in driving violence. We address this problem by exploiting a natural experiment offered by the presence of thousands of international soccer (football) players in the European professional leagues. We find a strong relationship between the history of civil conflict in a player's home country and his propensity to behave violently on the soccer field, as measured by yellow and red cards. This link is robust to region fixed effects, country characteristics (e.g., rule of law, per capita income), player characteristics (e.g., age, field position, quality), outliers, and team fixed effects. Reinforcing our claim that we isolate cultures of violence rather than simple rule-breaking or something else entirely, there is no meaningful correlation between a player's home country civil war history and soccer performance measures not closely related to violent conduct.
Handle: RePEc:nbr:nberwo:13968
Template-Type: ReDIF-Paper 1.0
Title: Too Young to Leave the Nest: The Effects of School Starting Age
Classification-JEL: I2; J1; J3
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH ED LS
Number: 13969
Creation-Date: 2008-04
Order-URL: http://www.nber.org/papers/w13969
File-URL: http://www.nber.org/papers/w13969.pdf
File-Format: application/pdf
Publication-Status: published as Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2011. "Too Young to Leave the Nest? The Effects of School Starting Age," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 455-467, December.
Abstract: Does it matter when a child starts school? While the popular press seems to suggest it does, there is limited evidence of a long-run effect of school starting age on student outcomes. This paper uses data on the population of Norway to examine the role of school starting age on longer-run outcomes such as IQ scores at age 18, educational attainment, teenage pregnancy, and earnings. Unlike much of the recent literature, we are able to separate school starting age from test age effects using scores from IQ tests taken outside of school, at the time of military enrolment, and measured when students are around age 18. Importantly, there is variation in the mapping between year and month of birth and the year the test is taken, allowing us to distinguish the effects of school starting age from pure age effects. We find evidence for a small positive effect of starting school younger on IQ scores measured at age 18. In contrast, we find evidence of much larger positive effects of age at test, and these results are very robust. We also find that starting school younger has a significant positive effect on the probability of teenage pregnancy, but has little effect on educational attainment of boys or girls. There appears to be a short-run positive effect on earnings of beginning school at a younger age; however, this effect has essentially disappeared by age 30. This pattern is consistent with the idea that starting school later reduces potential labor market experience at a given age for a given level of education; however, this becomes less important as individuals age.
Handle: RePEc:nbr:nberwo:13969
Template-Type: ReDIF-Paper 1.0
Title: Does Stabilizing Inflation Contribute To Stabilizing Economic Activity?
Classification-JEL: E31; E32; E52
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME
Number: 13970
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13970
File-URL: http://www.nber.org/papers/w13970.pdf
File-Format: application/pdf
Abstract: This paper discusses recent economic research that demonstrates that the objectives of price stability and stabilizing economic activity are often likely to be mutually reinforcing. Thus, the answer to the title of this paper--"Does stabilizing inflation contribute to stabilizing economic activity?"--is, for the most part, yes.
Handle: RePEc:nbr:nberwo:13970
Template-Type: ReDIF-Paper 1.0
Title: Hepatitis B Does Not Explain Male-Biased Sex Ratios in China
Classification-JEL: J1; J16
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Gang Chen
Note: LS
Number: 13971
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13971
File-URL: http://www.nber.org/papers/w13971.pdf
File-Format: application/pdf
Publication-Status: published as Oster, Emily & Chen, Gang & Yu, Xinsen & Lin, Wenyao, 2010. "Hepatitis B does not explain male-biased sex ratios in China," Economics Letters, Elsevier, vol. 107(2), pages 142-144, May.
Abstract: Earlier work (Oster, 2005) has argued, based on existing medical literature and analysis of cross country data and vaccination programs, that parents who are carriers of hepatitis B have a higher offspring sex ratio (more boys) than non-carrier parents. Further, since a number of Asian countries, China in particular, have high hepatitis B carrier rates, Oster (2005) suggested that hepatitis B could explain a large share { approximately 50% { of Asia's \missing women". Subsequent work has questioned this conclusion. Most notably, Lin and Luoh (2008) use data from a large cohort of births in Taiwan and find only a very tiny effect of maternal hepatitis carrier status on offspring sex ratio. Although this work is quite conclusive for the case of mothers, it leaves open the possibility that paternal carrier status is driving higher sex offspring sex ratios. To test this, we collected data on the offspring gender for a cohort of 67,000 people in China who are being observed in a prospective cohort study of liver cancer; approximately 15% of these individuals are hepatitis B carriers. In this sample, we find no effect of either maternal or paternal hepatitis B carrier status on offspring sex. Carrier parents are no more likely to have male children than non-carrier parents. This finding leads us to conclude that hepatitis B cannot explain skewed sex ratios in China.
Handle: RePEc:nbr:nberwo:13971
Template-Type: ReDIF-Paper 1.0
Title: Minority Self-Employment in the United States and the Impact of Affirmative Action Programs
Classification-JEL: J71
Author-Name: David G. Blanchflower
Author-Person: pbl22
Note: LS
Number: 13972
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13972
File-URL: http://www.nber.org/papers/w13972.pdf
File-Format: application/pdf
Publication-Status: published as David Blanchflower, 2009. "Minority self-employment in the United States and the impact of affirmative action programs," Annals of Finance, Springer, vol. 5(3), pages 361-396, June.
Abstract: n this paper I examine changes in self-employment that have occurred since the early 1980s in the United States. It is a companion paper to a recent equivalent paper that related to the UK. Data on random samples of approximately twenty million US workers are examined taken from the Basic Monthly files of the CPS (BMCPS), the 2000 Census and the 2006 American Community Survey (ACS). In contrast to the official definition of self-employment which simply counts the numbers of unincorporated self-employed, we also include the incorporated self-employed who are paid wages and salaries. The paper presents evidence on trends in self-employment for the US by race, ethnicity and gender. Evidence is also presented for construction which has self-employment rates roughly double the national rates and where there are strikingly high racial and gender disparities in self-employment rates. The construction sector is also important given the existence of public sector affirmative action programs at the federal, state and local levels directed at firms owned by women and minorities. I document the fact that disparities between the self-employment rates of white men and white women and minorities in construction narrowed in the 1980s, widened during the 1990s after the US Supreme Court's decision in Croson but then narrowed again since 2000 after a number of legal cases, which found such programs constitutional. Despite this substantial disparities remain, particularly in earnings. I also find evidence of discrimination in the small business credit market. Firms owned by minorities in general and blacks in particular are much more likely to have their loans denied and pay higher interest than is the case for white males. This is only partially explained by their lack of creditworthiness and is consistent with a finding of discrimination in the credit market by banks.
Handle: RePEc:nbr:nberwo:13972
Template-Type: ReDIF-Paper 1.0
Title: Sell Side School Ties
Classification-JEL: G10; G11; G14
Author-Name: Lauren Cohen
Author-Name: Andrea Frazzini
Author-Person: pfr54
Author-Name: Christopher Malloy
Author-Person: pma1313
Note: AP
Number: 13973
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13973
File-URL: http://www.nber.org/papers/w13973.pdf
File-Format: application/pdf
Publication-Status: published as Lauren Cohen & Andrea Frazzini & Christopher Malloy, 2010. "Sell-Side School Ties," Journal of Finance, American Finance Association, vol. 65(4), pages 1409-1437, 08.
Abstract: We study the impact of social networks on agents' ability to gather superior information about firms. Exploiting novel data on the educational backgrounds of sell side equity analysts and senior officers of firms, we test the hypothesis that analysts' school ties to senior officers impart comparative information advantages in the production of analyst research. We find evidence that analysts outperform on their stock recommendations when they have an educational link to the company. A simple portfolio strategy of going long the buy recommendations with school ties and going short buy recommendations without ties earns returns of 5.40% per year. We test whether Regulation FD, targeted at impeding selective disclosure, constrained the use of direct access to senior management. We find a large effect: pre-Reg FD the return premium from school ties was 8.16% per year, while post-Reg FD the return premium is nearly zero and insignificant. In contrast, in an environment that did not change selective disclosure regulation (the UK), the analyst school-tie premium has remained large and significant over the entire sample period.
Handle: RePEc:nbr:nberwo:13973
Template-Type: ReDIF-Paper 1.0
Title: Creating Maryland's Paper Money Economy, 1720-1739: The Role of Power, Print, and Markets
Classification-JEL: E42; E51; H20; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 13974
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13974
File-URL: http://www.nber.org/papers/w13974.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb, “Creating Maryland’s Paper Money Economy, 1720-1740: The Confluence of Political Constituencies, Economic Forces, Transatlantic Markets, and Law,” Journal of Early American History, 9, no. 1, (2019), pp. 34-58.
Abstract: The British North American colonies were the first western economies to rely on legislature-issued fiat paper money as their principal internal medium of exchange. This system arose piecemeal across the colonies making the paper money creation story for each colony unique. It was true monetary experimentation on a grand scale. The creation story for Maryland, perhaps the most unique among the colonies, is analyzed to evaluate how market forces, media influences, and the power of various constituents combined to shape its particular paper money system.
Handle: RePEc:nbr:nberwo:13974
Template-Type: ReDIF-Paper 1.0
Title: Panel Data Estimates Of The Production Function And Product And Labor Market Imperfections
Classification-JEL: C23; D21; J51; L13
Author-Name: Sabien Dobbelaere
Author-Person: pdo46
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 13975
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13975
File-URL: http://www.nber.org/papers/w13975.pdf
File-Format: application/pdf
Publication-Status: published as Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, 01.
Abstract: Consistent with two models of imperfect competition in the labor market, the efficient bargaining model and the monopsony model, we provide two extensions of a microeconomic version of Hall's framework for estimating price-cost margins. We show that both product and labor market imperfections generate a wedge between factor elasticities in the production function and their corresponding shares in revenue, that can be characterized by a "joint market imperfections parameter". Using an unbalanced panel of 10646 French firms in 38 manufacturing industries over the period 1978-2001, we can classify these industries into six different regimes depending on the type of competition in the product and the labor market. By far the most predominant regime is one of imperfect competition in the product market and efficient bargaining in the labor market (IC-EB), followed by a regime of imperfect competition in the product market and perfect competition or right-to-manage bargaining in the labor market (IC-PR), and by a regime of perfect competition in the product market and monopsony in the labor market (PC- MO). For each of these three predominant regimes, we assess within-regime firm differences in the estimated average price-cost mark-up and rent-sharing or labor supply elasticity parameters, following the Swamy methodology to determine the degree of true firm dispersion. As a way to assess the plausibility of our findings in the case of the dominant regime (IC-EB), we also relate our industry and firm-level estimates of price-cost mark-up and relative extent of rent sharing to industry characteristics and firm-specific variables respectively.
Handle: RePEc:nbr:nberwo:13975
Template-Type: ReDIF-Paper 1.0
Title: How are Preferences Revealed?
Classification-JEL: A11; B4; D01; D60; G11; H1
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG AP PE
Number: 13976
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13976
File-URL: http://www.nber.org/papers/w13976.pdf
File-Format: application/pdf
Publication-Status: published as Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2008. "How are preferences revealed?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1787-1794, August.
Abstract: Revealed preferences are tastes that rationalize an economic agent's observed actions. Normative preferences represent the agent's actual interests. It sometimes makes sense to assume that revealed preferences are identical to normative preferences. But there are many cases where this assumption is violated. We identify five factors that increase the likelihood of a disparity between revealed preferences and normative preferences: passive choice, complexity, limited personal experience, third- party marketing, and intertemporal choice. We then discuss six approaches that jointly contribute to the identification of normative preferences: structural estimation, active decisions, asymptotic choice, aggregated revealed preferences, reported preferences, and informed preferences. Each of these approaches uses consumer behavior to infer some property of normative preferences without equating revealed and normative preferences. We illustrate these issues with evidence from savings and investment outcomes.
Handle: RePEc:nbr:nberwo:13976
Template-Type: ReDIF-Paper 1.0
Title: The American Invasion of Europe: The Long Term Rise in Overseas Travel, 1820-2000
Classification-JEL: N7; N71; N72
Author-Name: Brandon Dupont
Author-Person: pdu113
Author-Name: Alka Gandhi
Author-Name: Thomas J. Weiss
Author-Person: pwe260
Note: DAE
Number: 13977
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13977
File-URL: http://www.nber.org/papers/w13977.pdf
File-Format: application/pdf
Publication-Status: published as The long-term rise in overseas travel by Americans, 1820–20001 BRANDON DUPONT1, ALKA GANDHI2, THOMAS WEISS3,‡ Article first published online: 6 JUN 2011 DOI: 10.1111/j.1468-0289.2011.00610.x © Economic History Society 2011 Issue The Economic History Review The Economic History Review Volume 65, Issue 1, pages 144–167, February 2012
Abstract: Tourism today is an activity of substantial economic importance worldwide, and has been for some time. Tourism is also of substantial economic importance in the United States, sufficient to warrant the Bureau of Economic Analysis's establishing special accounts on travel and tourism. In this paper we investigate the long term rise in overseas travel by Americans. Over the course of the nineteenth and twentieth centuries the number of Americans going abroad rose from less than 2,000 travelers to over 26 million. The industry went from one confined to the elite of American society to what some have described as mass tourism. We document this rise by compiling a long term series on overseas travel, and describe the changes in the composition of the travelers, their destinations, and their mode of travel. We use an Error Correction Model to explain how the increase came about.
Handle: RePEc:nbr:nberwo:13977
Template-Type: ReDIF-Paper 1.0
Title: Will Subprime be a Twin Crisis for the United States?
Classification-JEL: F02; F32; F33
Author-Name: Michael P. Dooley
Author-Person: pdo13
Author-Name: David Folkerts-Landau
Author-Name: Peter M. Garber
Author-Person: pga124
Note: IFM
Number: 13978
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13978
File-URL: http://www.nber.org/papers/w13978.pdf
File-Format: application/pdf
Publication-Status: published as Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2009. "Will Sub-Prime be a Twin Crisis for the United States?," Review of International Economics, Blackwell Publishing, vol. 17(4), pages 655-666, 09.
Abstract: We identify incentives generated by the Bretton Woods II system that may have contributed to the sub-prime liquidity crisis now working its way through the international monetary system. We then evaluate the persistent conjecture that the liquidity crisis is or will become a balance of payments crisis for the United States. Given that it happens, the additional costs associated with a sudden stop of net capital flows to the United States could be quite substantial. But we observe that emerging market governments have continued to acquire US assets even as yields have fallen, and the incentives for continuing to do so remain strong. Moreover, the Bretton Woods II system, which has clearly been the most resilient of the forces driving current markets, continues to generate low real interest rates in industrial countries and growth in emerging markets that will help limit the damage from the liquidity crisis.
Handle: RePEc:nbr:nberwo:13978
Template-Type: ReDIF-Paper 1.0
Title: Reforming Social Security with Progressive Personal Accounts
Classification-JEL: D91; E6; H55
Author-Name: John Geanakoplos
Author-Name: Stephen P. Zeldes
Note: AG AP EFG ME PE
Number: 13979
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13979
File-URL: http://www.nber.org/papers/w13979.pdf
File-Format: application/pdf
Publication-Status: published as Reforming Social Security with Progressive Personal Accounts, John Geanakoplos, Stephen P. Zeldes. in Social Security Policy in a Changing Environment, Brown, Liebman, and Wise. 2009
Abstract: The heated debate about how to reform Social Security has come to a standstill because the view of most Democrats (that Social Security must be a defined benefits plan similar in spirit to the current system) seems irreconcilable with the proposals supported by many Republicans (to create a defined contribution system of personal accounts holding marketed assets). We describe a system of "progressive personal accounts" that preserves the core goals of both parties, and that is self-balancing on an ongoing basis. Progressive personal accounts have two critical features: (1) accruals into the personal accounts would be exclusively in a new kind of derivative security (which we call a PAAW for Personal Annuitized Average Wage security) that pays its owner one inflation-corrected dollar during every year of life after his statutory retirement date, multiplied by the economy wide average wage at the retirement date and (2) households would buy their new PAAWs each year with their social security contributions, augmented or reduced by a government match that would add to contributions from households with low lifetime incomes by taking from households with high lifetime incomes. PAAWS define benefits and achieve risk sharing across generations, as Democrats would like, yet can be held in personal accounts with market valuations, as Republicans propose.
Handle: RePEc:nbr:nberwo:13979
Template-Type: ReDIF-Paper 1.0
Title: Analysis of U.S. Greenhouse Gas Tax Proposals
Classification-JEL: H23; Q54
Author-Name: Gilbert E. Metcalf
Author-Name: Sergey Paltsev
Author-Name: John Reilly
Author-Person: pre355
Author-Name: Henry Jacoby
Author-Name: Jennifer F. Holak
Note: EEE PE
Number: 13980
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13980
File-URL: http://www.nber.org/papers/w13980.pdf
File-Format: application/pdf
Abstract: The U.S. Congress is considering a set of bills designed to limit the nation's greenhouse gas (GHG) emissions. This paper complements the analysis by Paltsev et al. (2007) of cap-and-trade bills and applies the MIT Emissions Prediction and Policy Analysis (EPPA) model to carry out an analysis of the tax proposals. Several lessons emerge from this analysis. First, a low starting tax rate combined with a low rate of growth in the tax rate will not reduce emissions significantly. Second, the costs of GHG reductions are reduced with the inclusion of non-CO2 gases in the carbon tax scheme. Third, welfare costs of the policies can be affected by the rate of growth of the tax, even after controlling for cumulative emissions. Fourth, a carbon tax -- like any form of carbon pricing -- is regressive. However, general equilibrium considerations suggest that the short-run measured regressivity may be overstated. Additionally, the regressivity can be offset with a carefully designed rebate of some or all of the revenue. Finally, the carbon tax bills that have been proposed or submitted are for the most part comparable to many of the carbon cap-and-trade proposals that have been suggested. Thus the choice between a carbon tax and cap-and-trade system can be made on the basis of considerations other than their effectiveness at reducing emissions over some control period.
Handle: RePEc:nbr:nberwo:13980
Template-Type: ReDIF-Paper 1.0
Title: Inverse Probability Tilting for Moment Condition Models with Missing Data
Classification-JEL: C14; C21; C23
Author-Name: Bryan S. Graham
Author-Person: pgr95
Author-Name: Cristine Campos de Xavier Pinto
Author-Person: ppi260
Author-Name: Daniel Egel
Note: TWP
Number: 13981
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13981
File-URL: http://www.nber.org/papers/w13981.pdf
File-Format: application/pdf
Publication-Status: published as Bryan S. Graham & Cristine Campos De Xavier Pinto & Daniel Egel, 2012. "Inverse Probability Tilting for Moment Condition Models with Missing Data," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 1053-1079.
Abstract: We propose a new inverse probability weighting (IPW) estimator for moment condition models with missing data. Our estimator is easy to implement and compares favorably with existing IPW estimators, including augmented inverse probability weighting (AIPW) estimators, in terms of efficiency, robustness, and higher order bias. We illustrate our method with a study of the relationship between early Black-White differences in cognitive achievement and subsequent differences in adult earnings. In our dataset the early childhood achievement measure, the main regressor of interest, is missing for many units.
Handle: RePEc:nbr:nberwo:13981
Template-Type: ReDIF-Paper 1.0
Title: Controversies about the Rise of American Inequality: A Survey
Classification-JEL: D12; D3; D31; D63; I3; J24; J31; J62; R10
Author-Name: Robert J. Gordon
Author-Person: pgo50
Author-Name: Ian Dew-Becker
Note: DAE EFG LS
Number: 13982
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13982
File-URL: http://www.nber.org/papers/w13982.pdf
File-Format: application/pdf
Abstract: This paper provides a comprehensive survey of seven aspects of rising inequality that are usually discussed separately: changes in labor's share of income; inequality at the bottom of the income distribution, including labor mobility; skill-biased technical change; inequality among high incomes; consumption inequality; geographical inequality; and international differences in the income distribution, particularly at the top. We conclude that changes in labor's share play no role in rising inequality of labor income; by one measure labor's income share was almost the same in 2007 as in 1950. Within the bottom 90 percent as documented by CPS data, movements in the 50-10 ratio are consistent with a role of decreased union density for men and of a decrease in the real minimum wage for women, particularly in 1980-86. There is little evidence on the effects of imports, and an ambiguous literature on immigration which implies a small overall impact on the wages of the average native American, a significant downward effect on high-school dropouts, and potentially a large impact on previous immigrants working in occupations in which immigrants specialize. The literature on skill-biased technical change (SBTC) has been valuably enriched by a finer grid of skills, switching from a two-dimension to a three- or five-dimensional breakdown of skills. We endorse the three-way "polarization" hypothesis that seems a plausible way of explaining differentials in wage changes and also in outsourcing. To explain increased skewness at the top, we introduce a three-way distinction between market-driven superstars where audience magnification allows a performance to reach one or ten million people, a second market-driven segment consisting of occupations like lawyers and investment bankers, and a third segment consisting of top corporate officers. Our review of the CEO debate places equal emphasis on the market in showering capital gains through stock options and an arbitrary management power hypothesis based on numerous non-market aspects of executive pay. Data on consumption inequality are too fragile to reach firm conclusions. We introduce two new issues, disparities in the growth of price indexes and also of life expectancy between the rich and the poor. We conclude with a perspective on international differences that blends institutional and market-driven explanations.
Handle: RePEc:nbr:nberwo:13982
Template-Type: ReDIF-Paper 1.0
Title: Technology Capital and the U.S. Current Account
Classification-JEL: F32
Author-Name: Ellen R. McGrattan
Author-Person: pmc46
Author-Name: Edward C. Prescott
Author-Person: ppr10
Note: EFG IFM
Number: 13983
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13983
File-URL: http://www.nber.org/papers/w13983.pdf
File-Format: application/pdf
Publication-Status: published as McGrattan, Ellen R. & Prescott, Edward C., 2009. "Openness, technology capital, and development," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2454-2476, November.
Publication-Status: published as Ellen R. McGrattan & Edward C. Prescott, 2010. "Technology Capital and the US Current Account," American Economic Review, American Economic Association, vol. 100(4), pages 1493-1522, September.
Abstract: The U.S. Bureau of Economic Analysis (BEA) estimates the return on investments of foreign subsidiaries of U.S. multinational companies over the period 1982--2006 averaged 9.4 percent annually after taxes; U.S. subsidiaries of foreign multinationals averaged only 3.2 percent. Two factors distort BEA returns: technology capital and plant-specific intangible capital. Technology capital is accumulated know-how from intangible investments in R&D, brands, and organizations that can be used in foreign and domestic locations. Used abroad, it generates profits for foreign subsidiaries with no foreign direct investment (FDI). Plant-specific intangible capital in foreign subsidiaries is expensed abroad, lowering current profits on FDI and increasing future profits. We develop a multicountry general equilibrium model with an essential role for FDI and apply the BEA's methodology to construct economic statistics for the model economy. We estimate that mismeasurement of intangible investments accounts for over 60 percent of the difference in BEA returns.
Handle: RePEc:nbr:nberwo:13983
Template-Type: ReDIF-Paper 1.0
Title: When Is Quality of Financial System a Source of Comparative Advantage?
Classification-JEL: F1; F3; G3
Author-Name: Jiandong Ju
Author-Person: pju209
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: CF IFM ITI
Number: 13984
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13984
File-URL: http://www.nber.org/papers/w13984.pdf
File-Format: application/pdf
Publication-Status: published as Ju, Jiandong & Wei, Shang-Jin, 2011. "When is quality of financial system a source of comparative advantage?," Journal of International Economics, Elsevier, vol. 84(2), pages 178-187, July.
Abstract: Does finance follow the real economy, or the other way around? This paper unites the two competing schools of thought in a general equilibrium framework. Our key result is that there are threshold effects defined by a set of deep institutional parameters (cost of financial intermediation, quality of corporate governance, and level of property rights protection) which can be used to separate economies of high-quality institutions from those of low-quality institutions. On one hand, for economies with high-quality institutions, the view that finance follows the real economy is essentially correct. Equilibrium output and prices are determined by factor endowment. Further improvement in the institutions does not affect patterns of output. On the other hand, for economies with low-quality institutions, the view that finance is a key driver of the real economy is essentially correct. Not only is finance a source of comparative advantage, but an increase in capital endowment has no effect on outputs and prices. Our model extends a standard one-sector, partial equilibrium model of corporate finance to a multi-sector, general equilibrium analysis. Surprisingly, but consistent with data, we show that the size of financial markets (relative to GDP) does not change monotonically with either the quality of institutions or with the factor endowment. Free trade may reduce the aggregate income of an economy with low-quality institutions. Financial capital tends to flow from economies with low-quality institutions to those with high-quality institutions.
Handle: RePEc:nbr:nberwo:13984
Template-Type: ReDIF-Paper 1.0
Title: Time Spent in Home Production in the 20th Century: New Estimates from Old Data
Classification-JEL: J22; N32
Author-Name: Valerie A. Ramey
Author-Person: pra154
Note: EFG ME LS
Number: 13985
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13985
File-URL: http://www.nber.org/papers/w13985.pdf
File-Format: application/pdf
Publication-Status: published as Ramey, Valerie A., 2009. "Time Spent in Home Production in the Twentieth-Century United States: New Estimates from Old Data," The Journal of Economic History, Cambridge University Press, vol. 69(01), pages 1-47, March.
Abstract: This paper presents new estimates of time spent in home production in the U.S. during the 20th Century. Regressions based on detailed tabulations from early time diary studies are used to construct estimates for housewives that are closer to being nationally representative for the first half of the 20th Century. These estimates are then linked to estimates from individual-level data from 1965 to the present. Time diary studies of other groups such as employed women, men, and children are also compiled and analyzed. The new estimates suggest that time spent in home production by prime-age women fell by around six hours from 1900 to 1965 and by another 12 hours from 1965 to 2005. Time spent by prime-age men rose by 13 hours from 1900 to 2005. Considering the entire population, including children and older individuals, per capita time spent in home production increased slightly over the century. The new estimates are used to assess leading theories about long-run trends in home production.
Handle: RePEc:nbr:nberwo:13985
Template-Type: ReDIF-Paper 1.0
Title: The Inflation-Unemployment Trade-Off at Low Inflation
Classification-JEL: E0; E24; E30
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Luca Antonio Ricci
Author-Person: pri55
Note: EFG IFM LS ME
Number: 13986
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13986
File-URL: http://www.nber.org/papers/w13986.pdf
File-Format: application/pdf
Publication-Status: published as “The Inflation - Output Trade - Off with Downward Wage Rigidities,” The American Economic Review , V ol. 101, No. 4, pp. 1436 - 14 66, (2011) .
Abstract: Wage setters take into account the future consequences of their current wage choices in the presence of downward nominal wage rigidities. Several interesting implications arise. First, a closed-form solution for a long-run Phillips curve relates average unemployment to average wage inflation; the curve is virtually vertical for high inflation rates but becomes flatter as inflation declines. Second, macroeconomic volatility shifts the Phillips curve outward, implying that stabilization policies can play an important role in shaping the trade-off. Third, nominal wages tend to be endogenously rigid also upward, at low inflation. Fourth, when inflation decreases, volatility of unemployment increases whereas the volatility of inflation decreases: this implies a long-run trade-off also between the volatility of unemployment and that of wage inflation.
Handle: RePEc:nbr:nberwo:13986
Template-Type: ReDIF-Paper 1.0
Title: Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development
Classification-JEL: I12; J24
Author-Name: Janet Currie
Author-Person: pcu13
Note: CH EH LS PE
Number: 13987
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13987
File-URL: http://www.nber.org/papers/w13987.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
Abstract: There are many possible pathways between parental education, income, and health, and between child health and education, but only some of them have been explored in the literature. This essay focuses on links between parental socioeconomic status (as measured by education, income, occupation, or in some cases area of residence) and child health, and between child health and adult education or income. Specifically, I ask two questions: What is the evidence regarding whether parental socioeconomic status affects child health? And, what is the evidence relating child health to future educational and labor market outcomes? I show that there is now strong evidence of both links, suggesting that health could play a role in the intergenerational transmission of economic status.
Handle: RePEc:nbr:nberwo:13987
Template-Type: ReDIF-Paper 1.0
Title: Non-Economic Engagement and International Exchange: The Case of Environmental Treaties
Classification-JEL: F10; F34
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: EEE IFM ITI
Number: 13988
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13988
File-URL: http://www.nber.org/papers/w13988.pdf
File-Format: application/pdf
Publication-Status: published as Andrew K. Rose & Mark M. Spiegel, 2009. "Noneconomic Engagement and International Exchange: The Case of Environmental Treaties," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(2-3), pages 337-363, 03.
Abstract: We examine the role of non-economic partnerships in promoting international economic exchange. Since far-sighted countries are more willing to join costly international partnerships such as environmental treaties, environmental engagement tends to encourage international lending. Countries with such non-economic partnerships also find it easier to engage in economic exchanges since they face the possibility that debt default might also spill over to hinder their non-economic relationships. We present a theoretical model of these ideas, and then verify their empirical importance using a bilateral cross-section of data on international cross-holdings of assets and environmental treaties. Our results support the notion that international environmental cooperation facilitates economic exchange.
Handle: RePEc:nbr:nberwo:13988
Template-Type: ReDIF-Paper 1.0
Title: Corporate Social Responsibility Through an Economic Lens
Classification-JEL: L51; M14; Q50
Author-Name: Forest L. Reinhardt
Author-Name: Robert N. Stavins
Author-Person: pst167
Author-Name: Richard H. K. Vietor
Note: EEE IO LE PE
Number: 13989
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13989
File-URL: http://www.nber.org/papers/w13989.pdf
File-Format: application/pdf
Publication-Status: published as Forest L. Reinhardt & Robert N. Stavins & Richard H. K. Vietor, 2008. "Corporate Social Responsibility Through an Economic Lens," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 2(2), pages 219-239, Summer.
Abstract: Business leaders, government officials, and academics are focusing considerable attention on the concept of "corporate social responsibility" (CSR), particularly in the realm of environmental protection. Beyond complete compliance with environmental regulations, do firms have additional moral or social responsibilities to commit resources to environmental protection? How should we think about the notion of firms sacrificing profits in the social interest? May they do so within the scope of their fiduciary responsibilities to their shareholders? Can they do so on a sustainable basis, or will the forces of a competitive marketplace render such efforts and their impacts transient at best? Do firms, in fact, frequently or at least sometimes behave this way, reducing their earnings by voluntarily engaging in environmental stewardship? And finally, should firms carry out such profit-sacrificing activities (i.e., is this an efficient use of social resources)? We address these questions through the lens of economics, including insights from legal analysis and business scholarship.
Handle: RePEc:nbr:nberwo:13989
Template-Type: ReDIF-Paper 1.0
Title: Was It Prices, Productivity or Policy? The Timing and Pace of Latin American Industrialization after 1870
Classification-JEL: F1; N7; O2
Author-Name: Aurora Gómez Galvarriato
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE EFG
Number: 13990
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13990
File-URL: http://www.nber.org/papers/w13990.pdf
File-Format: application/pdf
Abstract: Brazil, Mexico and a few other Latin American republics enjoyed faster industrialization after 1870 than did the rest of Latin America and even faster than the rest of the poor periphery (except East Asia). How much of this economic performance was due to more accommodating institutions and greater political stability, changes that would have facilitated greater technology transfer and accumulation? That is, how much to changing fundamentals? How much instead to a cessation in the secular rise in the net barter terms of trade which reversed de-industrialization forces, thus favoring manufacturing? How much instead to cheaper foodstuffs coming from more open commercial policies ('grain invasions'), and from railroad-induced integration of domestic grain markets, serving to keep urban grain prices and thus nominal wages in industry low, helping to maintain competitiveness? How much instead to more pro-industrial real exchange rate and tariff policy? Which of these forces contributed most to industrialization among the Latin American leaders, long before their mid 20th century adoption of ISI policies? Changing fundamentals, changing market conditions, or changing policies?
Handle: RePEc:nbr:nberwo:13990
Template-Type: ReDIF-Paper 1.0
Title: Indexed Regulation
Classification-JEL: C68; D81; H41; Q54; Q58
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: William A. Pizer
Author-Person: ppi108
Note: EEE
Number: 13991
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13991
File-URL: http://www.nber.org/papers/w13991.pdf
File-Format: application/pdf
Publication-Status: published as Newell, Richard G. & Pizer, William A., 2008. "Indexed regulation," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 221-233, November.
Abstract: Seminal work by Weitzman (1974) revealed prices are preferred to quantities when marginal benefits are relatively flat compared to marginal costs. We extend this comparison to indexed policies, where quantities are proportional to an index, such as output. We find that policy preferences hinge on additional parameters describing the first and second moments of the index and the ex post optimal quantity level. When the ratio of these variables' coefficients of variation divided by their correlation is less than approximately two, indexed quantities are preferred to fixed quantities. A slightly more complex condition determines when indexed quantities are preferred to prices. Applied to climate change policy, we find that the range of variation and correlation in country-level carbon dioxide emissions and GDP suggests the ranking of an emissions intensity cap (indexed to GDP) compared to a fixed emission cap is not uniform across countries; neither policy clearly dominates the other.
Handle: RePEc:nbr:nberwo:13991
Template-Type: ReDIF-Paper 1.0
Title: Superpower Interventions and their Consequences for Democracy: An Empirical Inquiry
Classification-JEL: O1
Author-Name: William Easterly
Author-Person: pea1
Author-Name: Shanker Satyanath
Author-Name: Daniel Berger
Note: POL
Number: 13992
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13992
File-URL: http://www.nber.org/papers/w13992.pdf
File-Format: application/pdf
Abstract: Do superpower interventions to install and prop up political leaders in other countries subsequently result in more or less democracy, and does this effect vary depending on whether the intervening superpower is democratic or authoritarian? While democracy may be expected to decline contemporaneously with superpower interference, the effect on democracy after a few years is far from obvious. The absence of reliable information on covert interventions has hitherto served as an obstacle to seriously addressing these questions. The recent declassification of Cold War CIA and KGB documents now makes it possible to systematically address these questions in the Cold War context. We thus develop a new panel dataset of superpower interventions during the Cold War. We find that superpower interventions are followed by significant declines in democracy, and that the substantive effects are large. Perhaps surprisingly, once endogeneity is addressed, US and Soviet interventions have equally detrimental effects on the subsequent level of democracy; both decrease democracy by about 33%. Our findings thus suggest that one should not expect significant differences in the adverse institutional consequences of superpower interventions based on whether the intervening superpower is a democracy or a dictatorship.
Handle: RePEc:nbr:nberwo:13992
Template-Type: ReDIF-Paper 1.0
Title: Parental Education and Parental Time With Children
Classification-JEL: J13; J22
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Melissa Schettini Kearney
Note: CH LS PE
Number: 13993
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13993
File-URL: http://www.nber.org/papers/w13993.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Guryan & Erik Hurst & Melissa Kearney, 2008. "Parental Education and Parental Time with Children," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 23-46, Summer.
Abstract: Parents invest both their material resources and their time into raising their children. Time investment in children is thought to be critical to the development of "quality" children who will become productive adults. This paper has three goals related to the examination of parental time allocated to the care of their children. First, using data from the recent American Time Use Surveys (ATUS), we highlight what we think are the most interesting, and perhaps surprising, cross sectional patterns in time spent with children by parents within the United States. Second, we interpret our results in a Beckerian framework of time allocation with a view toward establishing whether parental childcare appears to be more akin to leisure or home production. Third, we examine data from a sample of 14 countries to establish whether the patterns we observe in the United States hold across countries and within other countries. We show that both within countries and across countries there is a strong positive relationship between parental education, or earnings, and time spent with children. We then show that time spent with children does not follow patterns typical of leisure or home production, suggesting an important difference. We speculate that one reason for this positive education gradient relates to the investment aspect of time spent with children.
Handle: RePEc:nbr:nberwo:13993
Template-Type: ReDIF-Paper 1.0
Title: The Non-Cognitive Returns to Class Size
Classification-JEL: I20; I21; I28
Author-Name: Thomas Dee
Author-Name: Martin West
Note: CH ED
Number: 13994
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13994
File-URL: http://www.nber.org/papers/w13994.pdf
File-Format: application/pdf
Publication-Status: published as “The Non - cognitive Returns to Class Size,” with Martin West, Educational Evaluation and Policy Analysis 33(1), March 2011, 23 - 46
Abstract: Although recent evidence suggests that non-cognitive skills such as engagement matter for academic and economic success, there is little evidence on how key educational inputs affect the development of these skills. We present a re-analysis of follow-up data from the Project STAR class-size experiment and find evidence that early-grade class-size reductions did improve subsequent student initiative. However, these effects did not persist into the 8th grade. Furthermore, the external and, possibly, the internal validity of these inferences is compromised by non-random attrition. We also present a complementary analysis based on nationally representative survey data and a research design that relies on contemporaneous within-student and within-teacher comparisons across two academic subjects. Our results indicate that smaller classes in 8th grade lead to improvements in measures of student engagement with effect sizes ranging from 0.05 to 0.09 and smaller effects persisting two years later. Using the estimated earnings impact of these non-cognitive skills and the direct cost of a class-size reduction, the implied internal rate of return from an 8th-grade class-size reduction is 4.6 percent overall, but 7.9 percent in urban schools.
Handle: RePEc:nbr:nberwo:13994
Template-Type: ReDIF-Paper 1.0
Title: The Unequal Geographic Burden of Federal Taxation
Classification-JEL: H24; H5; H77; J61; R1
Author-Name: David Y. Albouy
Author-Person: pal128
Note: POL PE
Number: 13995
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13995
File-URL: http://www.nber.org/papers/w13995.pdf
File-Format: application/pdf
Publication-Status: published as Albouy, David Y. "The Unequal Geographic Burden of Federal Taxation" Journal of Political Economy, vol 117, no. 4, (August 2009) pp. 635-667
Abstract: In the United States, workers in cities offering above-average wages - cities with high productivity, low quality-of-life, or inefficient housing sectors - pay 30 percent more in federal taxes than otherwise identical workers in cities offering below-average wages. According to simulation results, taxes lower long-run employment levels in high-wage areas by 17 percent and land and housing prices by 28 and 6 percent, causing locational inefficiencies costing 0.33 percent of income, or $40 billion in 2008. Employment is shifted from North to South and from urban to rural areas. Tax deductions index taxes partially to local cost-of-living, improving locational efficiency.
Handle: RePEc:nbr:nberwo:13995
Template-Type: ReDIF-Paper 1.0
Title: Minimum Wages and Firm Profitability
Classification-JEL: J23; L25
Author-Name: Mirko Draca
Author-Person: pdr157
Author-Name: Stephen Machin
Author-Person: pma110
Author-Name: John Van Reenen
Author-Person: pva45
Note: LS
Number: 13996
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13996
File-URL: http://www.nber.org/papers/w13996.pdf
File-Format: application/pdf
Publication-Status: published as Mirko Draca & Stephen Machin & John Van Reenen, 2011. "Minimum Wages and Firm Profitability," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 129-51, January.
Abstract: Although there is a large literature on the economic effects of minimum wages on labour market outcomes (especially employment), there is much less evidence on their impact on firm performance. In this paper we consider a very under-studied area - the impact of minimum wages on firm profitability. The analysis exploits the changes induced by the introduction of a national minimum wage to the UK labour market in 1999, using pre-policy information on the distribution of wages to construct treatment and comparison groups and implement a difference in differences approach. We report evidence showing that firm profitability was significantly reduced (and wages significantly raised) by the minimum wage introduction. This emerges from separate analyses of two distinct types of firm level panel data (one on firms in a very low wage sector, UK residential care homes, and a second on firms across all sectors). We find that net entry rates have fallen, but that the changes in exit and entry rates are statistically insignificant.
Handle: RePEc:nbr:nberwo:13996
Template-Type: ReDIF-Paper 1.0
Title: Obesity and Skill Attainment in Early Childhood
Classification-JEL: I1; I2; J13; J24
Author-Name: John Cawley
Author-Person: pca6
Author-Name: C. Katharina Spiess
Author-Person: psp48
Note: CH ED EH LS
Number: 13997
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13997
File-URL: http://www.nber.org/papers/w13997.pdf
File-Format: application/pdf
Publication-Status: published as Cawley, John and C. Katharina Spiess. “Obesity and Skill Attainment in Early Childhood.” Economics and Human Biology, December 2008, 6(3): 388-397.
Abstract: This paper investigates the association between obesity and skill attainment in early childhood (aged 2-4 years). Data from the German Socio-Economic Panel Study are used to estimate models of developmental functioning in four critical areas (verbal skills, activities of daily living, motor skills, and social skills) as a function of various measures of weight (including body mass index and obesity) controlling for a rich set of child, parent, and family characteristics. The findings indicate that, among boys, obesity is associated with reduced verbal skills, social skills, motor skills, and activities of daily living. Among girls, obesity is associated with reduced verbal skills. Further investigations show that the correlations exist even for those preschool children who spend no time in day care, which implies that it cannot be due solely to discrimination by teachers, classmates, or day care providers.
Handle: RePEc:nbr:nberwo:13997
Template-Type: ReDIF-Paper 1.0
Title: Specific Capital and Technological Variety
Classification-JEL: O1; O4
Author-Name: Boyan Jovanovic
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: PR
Number: 13998
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13998
File-URL: http://www.nber.org/papers/w13998.pdf
File-Format: application/pdf
Publication-Status: published as Boyan Jovanovic & Peter L. Rousseau, 2008. "Specific Capital and Technological Variety," Journal of Human Capital, University of Chicago Press, vol. 2(2), pages 129-152.
Abstract: Growth of technological variety offers more scope for the division of labor. And when a division of labor requires some specific training, the technological specificity of human capital grows and, with it, probably the firm specificity of that capital. We build a simple model that captures this observation. The model implies that a rising specialization of human and physical capital raises the rents in the average match between a firm and its human and physical capital. We document that in the last 40 years the firm's share of those rents has also grown, and we use the model to explain why this shift may have taken place.
Handle: RePEc:nbr:nberwo:13998
Template-Type: ReDIF-Paper 1.0
Title: Institutions and Behavior: Experimental Evidence on the Effects of Democracy
Classification-JEL: C10; C9; D7; O10
Author-Name: Pedro Dal Bó
Author-Person: pda45
Author-Name: Andrew Foster
Author-Person: pfo3
Author-Name: Louis Putterman
Author-Person: ppu14
Note: POL
Number: 13999
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w13999
File-URL: http://www.nber.org/papers/w13999.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Dal Bo & Andrew Foster & Louis Putterman, 2010. "Institutions and Behavior: Experimental Evidence on the Effects of Democracy," American Economic Review, American Economic Association, vol. 100(5), pages 2205-29, December.
Abstract: A novel experiment is used to show that the effect of a policy on the level of cooperation is greater when it is chosen democratically by the subjects than when it is exogenously imposed. In contrast to the previous literature, our experimental design allows us to control for selection effects (e.g. those who choose the policy may be affected differently by it). Our finding implies that democratic institutions may affect behavior directly in addition to having effects through the choice of policies. Our findings have implications for the generalizability of the results of randomized policy interventions.
Handle: RePEc:nbr:nberwo:13999
Template-Type: ReDIF-Paper 1.0
Title: When Should Firms Invest in Old Capital?
Classification-JEL: D21
Author-Name: Boyan Jovanovic
Note: PR TWP EFG
Number: 14000
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14000
File-URL: http://www.nber.org/papers/w14000.pdf
File-Format: application/pdf
Publication-Status: published as Boyan Jovanovic, 2009. "When should firms invest in old capital?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 107-123.
Abstract: This paper studies optimal investment policies when the production function depends on capital of various vintages. In such an environment it is natural to ask whether the firm will invest in old-vintage capital at all. In this paper I derive such a condition. Predictably, investment in old capital takes place if the elasticity of substitution between old and new capital is low, and when the depreciation of capital is high. But other parameters such as the rates of technological progress and depreciation matter as well.
Handle: RePEc:nbr:nberwo:14000
Template-Type: ReDIF-Paper 1.0
Title: Monetary Non-Neutrality in a Multi-Sector Menu Cost Model
Classification-JEL: E30
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Jón Steinsson
Author-Person: pst155
Note: EFG ME
Number: 14001
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14001
File-URL: http://www.nber.org/papers/w14001.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & Jón Steinsson, 2010. "Monetary Non-Neutrality in a Multisector Menu Cost Model," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 961-1013, August.
Abstract: Empirical evidence suggests that as much as 1/3 of the U.S. business cycle is due to nominal shocks. We calibrate a multi-sector menu cost model using new evidence on the cross-sectional distribution of the frequency and size of price changes in the U.S. economy. We augment the model to incorporate intermediate inputs. We show that the introduction of heterogeneity in the frequency of price change triples the degree of monetary non-neutrality generated by the model. We furthermore show that the introduction of intermediate inputs raises the degree of monetary non-neutrality by another factor of three, without adversely affecting the model's ability to match the large average size of price changes. Our multi-sector menu cost model with intermediate inputs generates variation in real output in response to calibrated aggregate nominal shocks that can account for roughly 23% of the U.S. business cycle.
Handle: RePEc:nbr:nberwo:14001
Template-Type: ReDIF-Paper 1.0
Title: Identification of Treatment Effects Using Control Functions in Models with Continuous, Endogenous Treatment and Heterogeneous Effects
Classification-JEL: C21; C31
Author-Name: Jean-Pierre Florens
Author-Name: James J. Heckman
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Edward J. Vytlacil
Author-Person: pvy2
Note: TWP
Number: 14002
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14002
File-URL: http://www.nber.org/papers/w14002.pdf
File-Format: application/pdf
Publication-Status: published as J. P. Florens & J. J. Heckman & C. Meghir & E. Vytlacil, 2008. "Identification of Treatment Effects Using Control Functions in Models With Continuous, Endogenous Treatment and Heterogeneous Effects," Econometrica, Econometric Society, vol. 76(5), pages 1191-1206, 09.
Abstract: We use the control function approach to identify the average treatment effect and the effect of treatment on the treated in models with a continuous endogenous regressor whose impact is heterogeneous. We assume a stochastic polynomial restriction on the form of the heterogeneity but, unlike alternative nonparametric control function approaches, our approach does not require large support assumptions.
Handle: RePEc:nbr:nberwo:14002
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Test of Taste-based Discrimination Changes in Ethnic Preferences and their Effect on Admissions to the NYSE during World War I
Classification-JEL: J7; N22; N42
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE LS
Number: 14003
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14003
File-URL: http://www.nber.org/papers/w14003.pdf
File-Format: application/pdf
Publication-Status: published as “Taste - Based Discrimination. Evidence from a Shift in Ethnic Pr eferences after WWI.” Exploration in Economic History , Volume 49, Issue 2, April 2012, pp. 167 – 188 .
Abstract: A significant challenge to empirically testing theories of discrimination has been the difficulty of identifying taste-based discrimination and of distinguishing it clearly from statistical discrimination. This paper addresses this problem through a two-part empirical test of taste-based discrimination. First, it constructs measures of revealed preferences, which establish that World War I created a strong and persistent shock to ethnic preferences that effectively switched the status of German Americans to an ethnic minority. Second, the paper uses this shock to ethnic preferences to identify the effects of taste-based discrimination at the example of traders at the New York Stock Exchange (NYSE). A new data set of more than 4,000 applications for seats on the NYSE reveals that the War more than doubled the probability that German applicants would be rejected (relative to Anglo-Saxons). The mechanism of taste-based discrimination is surprising: Prices are unaffected by ethnic preferences, and discrimination operates instead entirely through admissions.
Handle: RePEc:nbr:nberwo:14003
Template-Type: ReDIF-Paper 1.0
Title: Religion, Longevity, and Cooperation: The Case of the Craft Guild.
Classification-JEL: D02; D43; L1; L15; L2; L22; L23; N34; N64; N74; N84; N94; Z12
Author-Name: Gary Richardson
Author-Person: pri185
Author-Name: Michael McBride
Author-Person: pmc66
Note: DAE
Number: 14004
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14004
File-URL: http://www.nber.org/papers/w14004.pdf
File-Format: application/pdf
Publication-Status: published as Richardson, Gary & McBride, Michael, 2009. "Religion, longevity, and cooperation: The case of the craft guild," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 172-186, August.
Abstract: When the mortality rate is high, repeated interaction alone may not sustain cooperation, and religion may play an important role in shaping economic institutions. This insight explains why during the fourteenth century, when plagues decimated populations and the church promoted the doctrine of purgatory, guilds that bundled together religious and occupational activities dominated manufacturing and commerce. During the sixteenth century, the disease environment eased, and the Reformation dispelled the doctrine of purgatory, necessitating the development of new methods of organizing industry. The logic underlying this conclusion has implications for the study of institutions, economics, and religion throughout history and in the developing world today.
Handle: RePEc:nbr:nberwo:14004
Template-Type: ReDIF-Paper 1.0
Title: The Globalization of Advanced Art in the Twentieth Century
Classification-JEL: J00
Author-Name: David Galenson
Note: PR LS
Number: 14005
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14005
File-URL: http://www.nber.org/papers/w14005.pdf
File-Format: application/pdf
Publication-Status: published as The Globalization of Advanced Art in the Twentieth Century, David W. Galenson. in Conceptual Revolutions in Twentieth-Century Art, Galenson. 2009
Abstract: The twentieth century was a time of rapid globalization for advanced art. Artists from a larger number of countries made important contributions than in earlier periods, and they did so in a larger number of places. Many important innovations also diffused more rapidly, and more widely, than in earlier times. The dominance for much of the century of conceptual forms of art, from Cubism and Dada to Pop and Conceptual Art, was largely responsible for the greater speed with which innovations spread: conceptual techniques are communicated more readily, and are generally more versatile in their uses, than experimental methods. There is no longer a single dominant place in the art world, comparable to Paris for the first century of modern art, but it is unlikely that a large number of places will join New York and London as centers of artistic innovation in the future.
Handle: RePEc:nbr:nberwo:14005
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Employment during School on College Student Academic Performance
Classification-JEL: I2; J22
Author-Name: Jeffrey S. DeSimone
Author-Person: pde214
Note: ED LS
Number: 14006
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14006
File-URL: http://www.nber.org/papers/w14006.pdf
File-Format: application/pdf
Abstract: This paper estimates the effect of paid employment on grades of full-time, four-year students from four nationally representative cross sections of the Harvard College Alcohol Study administered during 1993-2001. The relationship could be causal in either direction and is likely contaminated by unobserved heterogeneity. Two-stage GMM regressions instrument for work hours using paternal schooling and being raised Jewish, which are hypothesized to reflect parental preferences towards education manifested in additional student financial support but not influence achievement conditional on maternal schooling, college and class. Extensive empirical testing supports the identifying assumptions of instrument strength and orthogonality. GMM results show that an additional weekly work hour reduces current year GPA by about 0.011 points, roughly five times more than the OLS coefficient but somewhat less than recent estimates. Effects are stable across specifications, time, gender, class and age, but vary by health status, maternal schooling, religious background and especially race/ethnicity.
Handle: RePEc:nbr:nberwo:14006
Template-Type: ReDIF-Paper 1.0
Title: Making Sense of the Labor Market Height Premium: Evidence From the British Household Panel Survey
Classification-JEL: I1; J3
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Christina Paxson
Author-Person: ppa335
Author-Name: Mahnaz Islam
Note: AG CH LS
Number: 14007
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14007
File-URL: http://www.nber.org/papers/w14007.pdf
File-Format: application/pdf
Publication-Status: published as Case, Anne & Paxson, Christina & Islam, Mahnaz, 2009. "Making sense of the labor market height premium: Evidence from the British Household Panel Survey," Economics Letters, Elsevier, vol. 102(3), pages 174-176, March.
Abstract: We use nine waves of the British Household Panel Survey (BHPS) to investigate the large labor market height premium observed in the BHPS, where each inch of height is associated with a 1.5 percent increase in wages, for both men and women. We find that half of the premium can be explained by the association between height and educational attainment among BHPS participants. Of the remaining premium, half can be explained by taller individuals selecting into higher status occupations and industries. These effects are consistent with our earlier findings that taller individuals on average have greater cognitive function, which manifests in greater educational attainment, and better labor market opportunities.
Handle: RePEc:nbr:nberwo:14007
Template-Type: ReDIF-Paper 1.0
Title: Have Newer Cardiovascular Drugs Reduced Hospitalization? Evidence From Longitudinal Country-Level Data on 20 OECD Countries, 1995-2003
Classification-JEL: I12; O33; O51; O52; O56
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EH PR
Number: 14008
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14008
File-URL: http://www.nber.org/papers/w14008.pdf
File-Format: application/pdf
Publication-Status: published as Frank R. Lichtenberg, 2009. "Have newer cardiovascular drugs reduced hospitalization? Evidence from longitudinal country-level data on 20 OECD countries, 1995-2003," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 519-534.
Abstract: This study examines the effect of changes in the vintage distribution of cardiovascular system drugs on hospitalization and mortality due to cardiovascular disease using longitudinal country-level data. The vintage of a drug is the first year in which it was marketed anywhere in the world. We use annual data on the utilization of over 1100 cardiovascular drugs (active ingredients) in 20 OECD countries during the period 1995-2003. Countries with larger increases in the share of cardiovascular drug doses that contained post-1990 or post-1995 ingredients had smaller increases in the cardiovascular disease hospital discharge rate, controlling for the quantity of cardiovascular medications consumed per person, the use of other medical innovations (CT scanners & MRI units), potential risk factors (average consumption of calories, tobacco, and alcohol), and demographic variables (population size & age structure, income, and educational attainment). The estimates also indicate that use of newer cardiovascular drugs has reduced average length of stay and the age-adjusted cardiovascular mortality rate, but not the number of potential years of life lost due to cardiovascular disease before age 70 per 100,000 population. The estimates indicate that if drug vintage had not increased during 1995-2004, hospitalization and mortality would have been higher in 2004. We estimate that per capita expenditure on cardiovascular hospital stays would have been 70% ($89) higher in 2004 had drug vintage not increased during 1995-2004. Per capita expenditure on cardiovascular drugs would have been lower in 2004 had drug vintage not increased during 1995-2004. But our estimate of the increase in expenditure on cardiovascular hospital stays is about 3.7 times as large as our estimate of the reduction in per capita expenditure for cardiovascular drugs that would have occurred ($24).
Handle: RePEc:nbr:nberwo:14008
Template-Type: ReDIF-Paper 1.0
Title: Pharmaceutical innovation and the longevity of Australians: a first look
Classification-JEL: H51; I12; J11; O33; O56
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Author-Name: Gautier Duflos
Note: EFG EH PR
Number: 14009
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14009
File-URL: http://www.nber.org/papers/w14009.pdf
File-Format: application/pdf
Abstract: We examine the impact of pharmaceutical innovation on the longevity of Australians during the period 1995-2003. Due to the government's Pharmaceutical Benefits Scheme, Australia has much better data on drug utilization than most other countries. We find that mean age at death increased more for diseases with larger increases in mean drug vintage. The estimates indicate that increasing the mean vintage of drugs by 5 years would increase mean age at death by almost 11 months. The estimates also indicate that using newer drugs reduced the number of years of potential life lost before the ages of 65 and 70 (but not before age 75). During the period 1995-2003, mean age at death increased by about 2.0 years, from 74.4 to 76.4. The estimates imply that, in the absence of any increase in drug vintage, mean age at death would have increased by only 0.7 years. The increase in drug vintage accounts for about 65% of the total increase in mean age at death. We obtain a rough estimate of the cost per life-year gained from using newer drugs. Under our assumptions, using newer drugs (increasing drug vintage) increased life expectancy by 1.23 years and increased lifetime drug expenditure by $12,976; the cost per life-year gained from using newer drugs is $10,585. An estimate made by other investigators of the value of a statistical Australian life-year ($70,618) is 6.7 times as large as our estimate of the cost per life-year gained from using newer drugs. We discuss several reasons why our estimate of the cost per life-year gained from using newer drugs could be too high or too low.
Handle: RePEc:nbr:nberwo:14009
Template-Type: ReDIF-Paper 1.0
Title: Is the Obesity Epidemic a Public Health Problem? A Decade of Research on the Economics of Obesity
Classification-JEL: I18
Author-Name: Tomas Philipson
Author-Person: pph37
Author-Name: Richard Posner
Author-Person: ppo25
Note: EH
Number: 14010
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14010
File-URL: http://www.nber.org/papers/w14010.pdf
File-Format: application/pdf
Publication-Status: published as Tomas J. Philipson & Richard A. Posner, 2008. "Is the Obesity Epidemic a Public Health Problem? A Review of Zoltan J. Acs and Alan Lyles's Obesity, Business and Public Policy," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 974-82, December.
Abstract: The world-wide and ongoing rise in obesity has generated enormous popular interest and policy concern in developing countries, where it is rapidly becoming the major public health problem facing such nations. As a consequence, there has been a rapidly growing field of economic analysis of the causes and consequences of this phenomenon. This paper discusses some of the central themes of this decade long research program, aiming at synthesizing the different strands of the literature, and to point to future research that seems particularly productive.
Handle: RePEc:nbr:nberwo:14010
Template-Type: ReDIF-Paper 1.0
Title: Air Quality and Early-Life Mortality: Evidence from Indonesia's Wildfires
Classification-JEL: I12; O1; Q52; Q53; Q56
Author-Name: Seema Jayachandran
Author-Person: pja86
Note: CH EH
Number: 14011
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14011
File-URL: http://www.nber.org/papers/w14011.pdf
File-Format: application/pdf
Publication-Status: published as ema Jayachandran, 2009. "Air Quality and Early-Life Mortality: Evidence from Indonesia’s Wildfires," Journal of Human Resources, University of Wisconsin Press, vol. 44(4).
Abstract: Smoke from massive wildfires blanketed Indonesia in late 1997. This paper examines the impact this air pollution (particulate matter) had on fetal, infant, and child mortality. Exploiting the sharp timing and spatial patterns of the pollution and inferring deaths from "missing children" in the 2000 Indonesian Census, I find that the pollution led to 15,600 missing children in Indonesia (1.2% of the affected birth cohorts). Prenatal exposure to pollution largely drives the result. The effect size is much larger in poorer areas, suggesting that differential effects of pollution contribute to the socioeconomic gradient in health.
Handle: RePEc:nbr:nberwo:14011
Template-Type: ReDIF-Paper 1.0
Title: Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints
Classification-JEL: M13; M38
Author-Name: Silvia Ardagna
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 14012
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14012
File-URL: http://www.nber.org/papers/w14012.pdf
File-Format: application/pdf
Publication-Status: published as Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints, Silvia Ardagna, Annamaria Lusardi. in International Differences in Entrepreneurship, Lerner and Schoar. 2010
Abstract: We use a micro dataset that collects information across individuals, countries, and time to investigate the determinants of entrepreneurial activity in thirty-seven developed and developing nations. We focus both on individual characteristics and on countries' regulatory differences. We show that individual characteristics, such as gender, age, and status in the workforce are important determinants of entrepreneurship, and we also highlight the relevance of social networks, self-assessed skills, and attitudes toward risk. Moreover, we find that regulation plays a critical role, particularly for those individuals who become entrepreneurs to pursue a business opportunity. The individual characteristics that are impacted most by regulation are those measuring working status, social network, business skills, and attitudes toward risk
Handle: RePEc:nbr:nberwo:14012
Template-Type: ReDIF-Paper 1.0
Title: Liquidity and Market Crashes
Classification-JEL: E43; E44; G11; G12
Author-Name: Jennifer Huang
Author-Person: phu418
Author-Name: Jiang Wang
Note: AP
Number: 14013
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14013
File-URL: http://www.nber.org/papers/w14013.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer Huang & Jiang Wang, 2009. "Liquidity and Market Crashes," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 22(7), pages 2407-2443, July.
Abstract: In this paper, we develop an equilibrium model for stock market liquidity and its impact on asset prices when constant market presence is costly. We show that even when agents' trading needs are perfectly matched, costly market presence prevents them from synchronizing their trades and hence gives rise to endogenous order imbalances and the need for liquidity. Moreover, the endogenous liquidity need, when it occurs, is characterized by excessive selling of significant magnitudes. Such liquidity-driven selling leads to market crashes in the absence of any aggregate shocks. Finally, we show that illiquidity in the market leads to high expected returns, negative and asymmetric return serial correlation, and a positive relation between trading volume and future returns. We also propose new measures of liquidity based on its asymmetric impact on prices and demonstrate a negative relation between these measures and expected stock returns.
Handle: RePEc:nbr:nberwo:14013
Template-Type: ReDIF-Paper 1.0
Title: Searching for Optimal Inequality/Incentives
Classification-JEL: J0; J01; J08; J24; J3
Author-Name: Anders Björklund
Author-Name: Richard Freeman
Author-Person: pfr23
Note: LS
Number: 14014
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14014
File-URL: http://www.nber.org/papers/w14014.pdf
File-Format: application/pdf
Publication-Status: published as Searching for Optimal Inequality/Incentives, Anders Björklund, Richard B. Freeman. in Reforming the Welfare State: Recovery and Beyond in Sweden, Freeman, Swedenborg, and Topel. 2010
Abstract: This paper examines the evolution of economic inequality in Sweden before, during and after the major macro-economic recession in the early 1990s. Earnings and income inequality increased after the downturn, but government safety net programs buttressed disposable income for those with low income, and despite the rise in inequality, Sweden remained one of the most egalitarian economies in the world. The rise in inequality raised the return to observable skills, but the returns are still too low to explain that Sweden moved to the top of the league tables in knowledge intensive activities. Our analysis of attitudes to inequality shows that more Swedes expressed more concern over the inequity in inequality after the rise in inequality in the 1990s than in the past. Further, more Swedes expressed greater dissatisfaction with wages and working conditions. On the other hand, the rise in unemployment did not reduce overall subjective well being, probably because individuals adapted to higher levels of unemployment.
Handle: RePEc:nbr:nberwo:14014
Template-Type: ReDIF-Paper 1.0
Title: Private Sunspots and Idiosyncratic Investor Sentiment
Classification-JEL: D82; D84; E32; G11
Author-Name: George-Marios Angeletos
Author-Person: pan143
Note: EFG
Number: 14015
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14015
File-URL: http://www.nber.org/papers/w14015.pdf
File-Format: application/pdf
Abstract: This paper shows how rational investors can have different degrees of optimism regarding the prospects of the economy, even if they share exactly the same information regarding all economic fundamentals. The key is that heterogeneity in expectations regarding endogenous outcomes can emerge as a purely self-fulfilling equilibrium property when investment choices are strategic complements. This in turn has interesting novel positive and normative implications for a wide class of models that feature such complementarities: (i) It can rationalize idiosyncratic investor sentiment. (ii) It can be the source of significant heterogeneity in real and financial investment choices, even in the absence of any heterogeneity in individual characteristics and despite the presence of a strong incentive to coordinate on the same course of action. (iii) It can sustain rich fluctuations in aggregate investment and asset prices, including fluctuations that are smoother than those often associated with multiple-equilibria models. (iv) It can capture the idea that investors learn slowly how to coordinate on a certain course of action. (v) It can boost welfare. (vi) It can render apparent coordination failures evidence of improved efficiency.
Handle: RePEc:nbr:nberwo:14015
Template-Type: ReDIF-Paper 1.0
Title: Estimation of De Facto Exchange Rate Regimes: Synthesis of the Techniques for Inferring Flexibility and Basket Weights
Classification-JEL: F31; F41
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM
Number: 14016
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14016
File-URL: http://www.nber.org/papers/w14016.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Frankel & Shang-Jin Wei, 2008. "Estimation of De Facto Exchange Rate Regimes: Synthesis of the Techniques for Inferring Flexibility and Basket Weights," IMF Staff Papers, Palgrave Macmillan Journals, vol. 55(3), pages 384-416, July.
Abstract: The paper offers a new approach to estimate de facto exchange rate regimes, a synthesis of two techniques. One is a technique that the authors have used in the past to estimate implicit de facto weights when the hypothesis is a basket peg with little flexibility. The second is a technique used by others to estimate the de facto degree of exchange rate flexibility when the hypothesis is an anchor to the dollar or some other single major currency, but with a possibly-substantial degree of flexibility around that anchor. Since many currencies today follow variants of Band-Basket-Crawl, it is important to have available a technique that can cover both dimensions, inferring weights and inferring flexibility. We try out the technique on twenty-some currencies, over the period 1980-2007. Most are currencies that have officially used baskets as anchors for at least part of this sample period. But a few are known floaters or known simple peggers. In general the synthesis technique seems to work as it should.
Handle: RePEc:nbr:nberwo:14016
Template-Type: ReDIF-Paper 1.0
Title: Understanding International Price Differences Using Barcode Data
Classification-JEL: F1; F15; F31
Author-Name: Christian Broda
Author-Name: David E. Weinstein
Author-Person: pwe34
Note: IFM ITI
Number: 14017
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14017
File-URL: http://www.nber.org/papers/w14017.pdf
File-Format: application/pdf
Abstract: The empirical literature in international finance has produced three key results about international price deviations: borders give rise to flagrant violations of the law of one price, distance matters enormously for understanding these deviations, and most papers find that convergence rates back to purchasing power parity are inconsistent with the evidence of micro studies on nominal price stickiness. The data underlying these results are mostly comprised of price indexes and price surveys of goods that may not be identical internationally. In this paper, we revisit these three stylized facts using massive amounts of US and Canadian data that share a common barcode classification. We find that none of these three main stylized facts survive. We use our barcode level data to replicate prior work and explain what assumptions caused researchers to find different results from those we find in this paper. Overall, our work is supportive of simple pricing models where the degree of market segmentation across the border is similar to that within borders.
Handle: RePEc:nbr:nberwo:14017
Template-Type: ReDIF-Paper 1.0
Title: Hedonic Imputation versus Time Dummy Hedonic Indexes
Classification-JEL: C43; C82; E31; O47
Author-Name: W. Erwin Diewert
Author-Person: pdi117
Author-Name: Saeed Heravi
Author-Name: Mick Silver
Note: EFG PR TWP
Number: 14018
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14018
File-URL: http://www.nber.org/papers/w14018.pdf
File-Format: application/pdf
Publication-Status: published as Hedonic Imputation versus Time Dummy Hedonic Indexes, W. Erwin Diewert, Saeed Heravi, Mick Silver. in Price Index Concepts and Measurement, Diewert, Greenlees, and Hulten. 2009
Publication-Status: published as W. E. Diewert & Mick Silver & Saeed Heravi, 2007. "Hedonic Imputation Versus Time Dummy Hedonic Indexes," IMF Working Papers, vol 07(234).
Abstract: Statistical offices try to match item models when measuring inflation between two periods. However, for product areas with a high turnover of differentiated models, the use of hedonic indexes is more appropriate since they include the prices and quantities of unmatched new and old models. The two main approaches to hedonic indexes are hedonic imputation (HI) indexes and dummy time hedonic (HD) indexes. This study provides a formal analysis of the difference between the two approaches for alternative implementations of an index that uses weighting that is comparable to the weighting used by the Törnqvist superlative index in standard index number theory. This study shows exactly why the results may differ and discusses the issue of choice between these approaches. An illustrative study for desktop PCs is provided.
Handle: RePEc:nbr:nberwo:14018
Template-Type: ReDIF-Paper 1.0
Title: Inflation, Monetary Policy and Stock Market Conditions
Classification-JEL: E31; E52; G12; N12; N22
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Michael J. Dueker
Author-Name: David C. Wheelock
Note: ME EFG AP
Number: 14019
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14019
File-URL: http://www.nber.org/papers/w14019.pdf
File-Format: application/pdf
Abstract: This paper examines the association between inflation, monetary policy and U.S. stock market conditions during the second half of the 20th century. We estimate a latent variable VAR to examine how macroeconomic and policy shocks affect the condition of the stock market. Further, we examine the contribution of various shocks to market conditions during particular episodes and find evidence that inflation and interest rate shocks had particularly strong impacts on market conditions in the postwar era. Disinflation shocks promoted market booms and inflation shocks contributed to busts. We conclude that central banks can contribute to financial market stability by minimizing unanticipated changes in inflation.
Handle: RePEc:nbr:nberwo:14019
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Output and Prices of the Lottery Sector: An Application of Implicit Expected Utility Theory
Classification-JEL: C43; D81; L83
Author-Name: Kam Yu
Author-Person: pyu27
Note: PR
Number: 14020
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14020
File-URL: http://www.nber.org/papers/w14020.pdf
File-Format: application/pdf
Publication-Status: published as Measuring the Output and Prices of the Lottery Sector: An Application of Implicit Expected Utility Theory, Kam Yu. in Price Index Concepts and Measurement, Diewert, Greenlees, and Hulten. 2009
Abstract: Using implicit expected utility theory, a money metric of utility derived from playing a lottery game is developed. Output of the lottery sector can be defined as the difference in utility with and without the game. Using a kinked parametric functional form, outputs of the Canadian Lotto 6/49 are estimated. Results show that this direct economic approach yield an average output which is almost three times of the official GDP, which takes total factor costs as output. A by-product of the estimation is an implicit price index for lottery, which can serve as a cost-of-living index for the CPI. The estimated price elasticity of demand -0.67 closely resembles results for the U.K. and Israel in previous studies.
Handle: RePEc:nbr:nberwo:14020
Template-Type: ReDIF-Paper 1.0
Title: The Narrowing Gap in New York City Teacher Qualifications and its Implications for Student Achievement in High-Poverty Schools
Classification-JEL: I21; J24; J45
Author-Name: Donald Boyd
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: Jonah Rockoff
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED LS
Number: 14021
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14021
File-URL: http://www.nber.org/papers/w14021.pdf
File-Format: application/pdf
Publication-Status: published as Donald Boyd & Hamilton Lankford & Susanna Loeb & Jonah Rockoff & James Wyckoff, 2008. "The narrowing gap in New York City teacher qualifications and its implications for student achievement in high-poverty schools," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(4), pages 793-818.
Abstract: The gap between the qualifications of New York City teachers in high-poverty schools and low-poverty schools has narrowed substantially since 2000. Most of this gap-narrowing resulted from changes in the characteristics of newly hired teachers, and largely has been driven by the virtual elimination of newly hired uncertified teachers coupled with an influx of teachers with strong academic backgrounds in the Teaching Fellows program and Teach for America. The improvements in teacher qualifications, especially among the poorest schools, appear to have resulted in improved student achievement. By estimating the effect of teacher attributes using a value-added model, the analyses in this paper predict that observable qualifications of teachers resulted in average improved achievement for students in the poorest decile of schools of .03 standard deviations, about half the difference between being taught by a first year teacher and a more experienced teacher. If limited to teachers who are in the first or second year of teaching, where changes in qualifications are greatest, the gain equals two-thirds of the first-year experience effect.
Handle: RePEc:nbr:nberwo:14021
Template-Type: ReDIF-Paper 1.0
Title: Who Leaves? Teacher Attrition and Student Achievement
Classification-JEL: I21; J24
Author-Name: Donald Boyd
Author-Name: Pam Grossman
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED LS
Number: 14022
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14022
File-URL: http://www.nber.org/papers/w14022.pdf
File-Format: application/pdf
Abstract: Almost a quarter of entering public-school teachers leave teaching within their first three years. High attrition would be particularly problematic if those leaving were the more able teachers. The goal of this paper is estimate the extent to which there is differential attrition based on teachers' value-added to student achievement. Using data for New York City schools from 2000-2005, we find that first-year teachers whom we identify as less effective at improving student test scores have higher attrition rates than do more effective teachers in both low-achieving and high-achieving schools. The first-year differences are meaningful in size; however, the pattern is not consistent for teachers in their second and third years. For teachers leaving low-performing schools, the more effective transfers tend to move to higher achieving schools, while less effective transfers stay in lower-performing schools, likely exacerbating the differences across students in the opportunities they have to learn.
Handle: RePEc:nbr:nberwo:14022
Template-Type: ReDIF-Paper 1.0
Title: Assessing the Federal Deduction for State and Local Tax Payments
Classification-JEL: H2; H71; H77
Author-Name: Gilbert E. Metcalf
Note: PE
Number: 14023
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14023
File-URL: http://www.nber.org/papers/w14023.pdf
File-Format: application/pdf
Publication-Status: published as Metcalf, Gilbert E., 2011. "Assessing The Federal Deduction For State And Local Tax Payments," National Tax Journal, National Tax Association, vol. 64(2), pages 565-90, June Cita.
Publication-Status: published as Assessing the Federal Deduction for State and Local Tax Payments, Gilbert E. Metcalf. in Economic Analysis of Tax Expenditures, Poterba. 2011
Abstract: Federal deductibility for state and local taxes constitutes one of the largest tax expenditures in the federal budget and provides a significant source of federal support to state and local governments. Deductibility was restricted in the Tax Reform Act of 1986 by removing the deduction for general sales taxes. More recently the President's Advisory Panel on Federal Tax Reform recommended eliminating the deduction altogether as one of several revenue-raising initiatives to finance comprehensive tax reform. I carry out a number of distributional analyses - considering both variation across income and across states - of the subsidy from deductibility as well as the distributional impact of potential partial reforms. In addition, I consider three counterfactuals for 2004 - a tax system without the Bush tax cuts for 2001 and 2003, a tax system without the 2004 AMT patch, and a tax system without the AMT - to see how the benefits of deductibility are affected by these changes in the tax law. Next I consider how behavioral responses affect the tax expenditure estimates. Feldstein and Metcalf (1987) argued that tax expenditures overestimate the revenue gain from eliminating deductibility as they do not take into account a likely shift away from once-deductible taxes to non-deductible taxes and fees in the absence of deductibility. Many of these latter taxes and fees are paid by businesses. As business costs rise, federal business tax collections would fall, offsetting some of the gains of ending deductibility. Feldstein and Metcalf also found that ending deductibility would have little if any impact on state and local spending itself. Using a large panel of data on state and local governments, I revisit this issue and find that the Feldstein-Metcalf results are robust to adding more years of analysis.
Handle: RePEc:nbr:nberwo:14023
Template-Type: ReDIF-Paper 1.0
Title: China's Growing Economic Activity in Africa
Classification-JEL: F13; F59; O53; O55
Author-Name: Hany Besada
Author-Name: Yang Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 14024
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14024
File-URL: http://www.nber.org/papers/w14024.pdf
File-Format: application/pdf
Abstract: Trade between the whole of Africa and China (imports and exports summed) grew from $10.6 billion to $73.3 billion between 2000 and 2007, and between Sub-Saharan Africa and China from $7 billion to $59 billion over the same period. China is now Africa's third largest trading partner behind the EU and the US. The Chinese FDI stock in Africa has grown from $49 million in 1990 to $2.6 billion in 2006. On the basis of these data, one frequently hears the claim that China is now a dominant influence in Africa. Here we both evaluate such claims, and assess what factors underlay this phenomenon. We suggest that while the annual growth rates of trade and investment flows are high (around 30% per year sine the late 1990's), the levels are still considerably smaller than such claims might suggest. China in 2006 accounted for only $520 million of inward FDI compared to a total from all sources of $36 billion, around 1.4% of total FDI inflows to Africa; and only 8.6% of African exports and 9.6% of African imports. African interdependence with China thus remains proportionally smaller than that for most other geographical areas, but is growing rapidly. Factors behind this growth are discussed in the text.
Handle: RePEc:nbr:nberwo:14024
Template-Type: ReDIF-Paper 1.0
Title: Carbon Motivated Border Tax Adjustments: Old Wine in Green Bottles?
Classification-JEL: F13; F18; Q56
Author-Name: Ben Lockwood
Author-Person: plo65
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE IO ITI
Number: 14025
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14025
File-URL: http://www.nber.org/papers/w14025.pdf
File-Format: application/pdf
Publication-Status: published as Ben Lockwood & John Whalley, 2010. "Carbon-motivated Border Tax Adjustments: Old Wine in Green Bottles?," The World Economy, Blackwell Publishing, vol. 33(6), pages 810-819, 06.
Abstract: We discuss emerging proposals for border tax adjustments (BTAs) to accompany commitments to reduce carbon emissions in the EU, the US and other OECD economies. The rationale offered for such border adjustment is that various entities, such as the EU, if making commitments to reduce emissions which go beyond those undertaken in other regions of the world, impose added costs on domestic producers which create a competitive disadvantage for them. Some form of remedy is viewed as reasonable to maintain the competitiveness of domestic industries when responding to global environmental problems. In this paper, we argue that despite its current carbon manifestation, the issue of border tax adjustments and both their rationale and their effects on trade are not new and, despite the present debate (which seems to overlook older literature), have arisen before. Earlier debate on border tax adjustments occurred at the time of the adoption of the Value Added Tax (VAT) in the EU as a tax harmonization target in the early 1960's. But academic literature of the time showed that a change between origin and destination basis in the VAT would be neutral and hence the use of a destination based tax in the EU to accompany the VAT offered no trade advantage to Europe. Here we argue that essentially the same arguments also apply for carbon motivated BTAs, and in the current debate there seems to be a misconception between price level effects and relative price effects stemming from a BTA, which needs correcting. We also argue that the impact of border tax adjustments should be viewed as independent of the motivation of the adjustments.
Handle: RePEc:nbr:nberwo:14025
Template-Type: ReDIF-Paper 1.0
Title: Systemic Sudden Stops: The Relevance Of Balance-Sheet Effects And Financial Integration
Classification-JEL: F31; F32; F34; F41
Author-Name: Guillermo A. Calvo
Author-Person: pca694
Author-Name: Alejandro Izquierdo
Author-Person: piz6
Author-Name: Luis-Fernando Mejía
Author-Person: pme106
Note: IFM
Number: 14026
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14026
File-URL: http://www.nber.org/papers/w14026.pdf
File-Format: application/pdf
Abstract: Using a sample of 110 developed and developing countries for the period 1990-2004 we analyze the empirical characteristics of systemic sudden stops (3S) in capital flows --understood as large and largely unexpected capital account contractions that occur in periods of systemic turmoil -- and the relevance of balance sheet effects in the likelihood of their materialization. We conjecture that large real exchange rate (RER) fluctuations come hand in hand with 3S. A small supply of tradable goods relative to their domestic absorption -- a proxy for potential changes in the real exchange rate -- and large foreign-exchange denominated debts towards the domestic banking system, denoted Domestic Liability Dollarization, DLD, are claimed to be key determinants of the probability of 3S, conforming a balance-sheet effect that impacts on the probability of 3S in non-linear fashion. Regarding financial integration, the larger is the latter, the larger is likely to be the probability of Sudden Stop; however, beyond a critical point the relationship gets a sign reversion.
Handle: RePEc:nbr:nberwo:14026
Template-Type: ReDIF-Paper 1.0
Title: Big Business Stability and Social Welfare
Classification-JEL: D3; G3; I0; J0; O4
Author-Name: Kathy Fogel
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 14027
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14027
File-URL: http://www.nber.org/papers/w14027.pdf
File-Format: application/pdf
Publication-Status: published as Fogel, Kathy & Morck, Randall & Yeung, Bernard, 2008. "Big business stability and economic growth: Is what's good for General Motors good for America?," Journal of Financial Economics, Elsevier, vol. 89(1), pages 83-108, July.
Publication-Status: published as Big Business Stability and Social Welfare, Kathy Fogel, Randall Morck, Bernard Yeung. in Financial Sector Development in the Pacific Rim, Ito and Rose. 2009
Abstract: Many countries appear to have excessively stable big business sectors, in that higher rates of big business turnover have been correlated with faster economy growth. Public policies that stabilize big business sectors are sometimes justified as supportive of social objectives. We find no consistent link between big business stability and public goods provision, egalitarianism, or labor empowerment. While absence of evidence is not evidence of absence, these findings suggest that other explanations, such as special interest politics or behavioral biases favoring the status quo also be considered.
Handle: RePEc:nbr:nberwo:14027
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Foresight: Analytics and Econometrics
Classification-JEL: E6; H3
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Author-Name: Shu-Chun Susan Yang
Author-Person: pya89
Note: EFG PE
Number: 14028
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14028
File-URL: http://www.nber.org/papers/w14028.pdf
File-Format: application/pdf
Abstract: Fiscal foresight---the phenomenon that legislative and implementation lags ensure that private agents receive clear signals about the tax rates they face in the future---is intrinsic to the tax policy process. This paper develops an analytical framework to study the econometric implications of fiscal foresight. Simple theoretical examples show that foresight produces equilibrium time series with a non-invertible moving average component, which misaligns the agents' and the econometrician's information sets in estimated VARs. Economically meaningful shocks to taxes, therefore, cannot be extracted from statistical innovations in conventional ways. Econometric analyses that fail to align agents' and the econometrician's information sets can produce distorted inferences about the effects of tax policies. Because non-invertibility arises as a natural outgrowth of the fact that agents' optimal decisions discount future tax obligations, it is likely to be endemic to the study of fiscal policy. In light of the implications of the analytical framework, we evaluate two existing empirical approaches to quantifying the impacts of fiscal foresight. The paper also offers a formal interpretation of the narrative approach to identifying fiscal policy.
Handle: RePEc:nbr:nberwo:14028
Template-Type: ReDIF-Paper 1.0
Title: Government Sponsored versus Private Venture Capital: Canadian Evidence
Classification-JEL: G24; H0; O3
Author-Name: James A. Brander
Author-Person: pbr168
Author-Name: Edward Egan
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Note: CF PR
Number: 14029
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14029
File-URL: http://www.nber.org/papers/w14029.pdf
File-Format: application/pdf
Publication-Status: published as Government Sponsored versus Private Venture Capital: Canadian Evidence, James A. Brander, Edward Egan, Thomas F. Hellmann. in International Differences in Entrepreneurship, Lerner and Schoar. 2010
Abstract: This paper investigates the relative performance of enterprises backed by government-sponsored venture capitalists and private venture capitalists. While previous studies focus mainly on investor returns, this paper focuses on a broader set of public policy objectives, including value-creation, innovation, and competition. A number of novel data-collection methods, including web-crawlers, are used to assemble a near-comprehensive data set of Canadian venture-capital backed enterprises. The results indicate that enterprises financed by government-sponsored venture capitalists underperform on a variety of criteria, including value-creation, as measured by the likelihood and size of IPOs and M&As, and innovation, as measured by patents. It is important to understand whether such underperformance arises from a selection effect in which private venture capitalists have a higher quality threshold for investment than subsidized venture capitalists, or whether it arises from a treatment effect in which subsidized venture capitalists crowd out private investment and, in addition, provide less effective mentoring and other value-added skills. We find suggestive evidence that crowding out and less effective treatment are problems associated with government-backed venture capital. While the data does not allow for a definitive welfare analysis, the results cast some doubt on the desirability of certain government interventions in the venture capital market.
Handle: RePEc:nbr:nberwo:14029
Template-Type: ReDIF-Paper 1.0
Title: The Allocative Cost of Price Ceilings in the U.S. Residential Market for Natural Gas
Classification-JEL: D45; L51; L71; Q41; Q48
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Lutz Kilian
Author-Person: pki110
Note: EEE
Number: 14030
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14030
File-URL: http://www.nber.org/papers/w14030.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Political Economy, 2011, 119(2), 212-241.
Abstract: A direct consequence of imposing a ceiling on the price of a good for which secondary markets do not exist, is that, when there is excess demand, the good will not be allocated to the buyers who value it the most. The resulting allocative cost has been discussed in the literature as a potentially important component of the total welfare loss from price ceilings, but its practical importance has yet to be established empirically. In this paper, we address this question using data for the U.S. residential market for natural gas which was subject to price ceilings during 1954-1989. This market is well suited for such an empirical analysis and natural gas price ceilings affected millions of households. Using a household-level, discrete-continuous model of natural gas demand, we estimate that the allocative cost in the U.S. residential market for natural gas averaged $4.6 billion annually since the 1950s, effectively tripling previous estimates of the net welfare loss to U.S. consumers. We quantify the evolution of this allocative cost and its geographical distribution during the post-war period, and we highlight implications of our analysis for the regulation of other markets.
Handle: RePEc:nbr:nberwo:14030
Template-Type: ReDIF-Paper 1.0
Title: Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall
Classification-JEL: I1; I2; I3; O1; O15; Q5
Author-Name: Sharon L. Maccini
Author-Name: Dean Yang
Author-Person: pya75
Note: CH ED EH LS
Number: 14031
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14031
File-URL: http://www.nber.org/papers/w14031.pdf
File-Format: application/pdf
Publication-Status: published as Sharon Maccini & Dean Yang, 2009. "Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall," American Economic Review, American Economic Association, vol. 99(3), pages 1006-26, June.
Abstract: How sensitive is long-run individual well-being to environmental conditions early in life? This paper examines the effect of weather conditions around the time of birth on the health, education, and socioeconomic outcomes of Indonesian adults born between 1953 and 1974. We link historical rainfall for each individual's birth-year and birth-location with current adult outcomes from the 2000 wave of the Indonesia Family Life Survey. Higher early-life rainfall has large positive effects on the adult outcomes of women, but not of men. Women with 20% higher rainfall (relative to normal local rainfall) in their year and location of birth are 3.8 percentage points less likely to self-report poor or very poor health, attain 0.57 centimeters greater height, complete 0.22 more grades of schooling, and live in households that score 0.12 standard deviations higher on an asset index. These patterns most plausibly reflect a positive impact of rainfall on agricultural output, leading to higher household incomes and food availability and better health for infant girls. We present suggestive evidence that eventual benefits for adult women's socioeconomic status are most strongly mediated by improved schooling attainment, which in turn improves socioeconomic status in adulthood.
Handle: RePEc:nbr:nberwo:14031
Template-Type: ReDIF-Paper 1.0
Title: Does Your Cohort Matter? Measuring Peer Effects in College Achievement
Classification-JEL: I20
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Richard L. Fullerton
Author-Name: James E. West
Author-Person: pwe191
Note: ED
Number: 14032
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14032
File-URL: http://www.nber.org/papers/w14032.pdf
File-Format: application/pdf
Publication-Status: published as Scott E. Carrell & Richard L. Fullerton & James E. West, 2009. "Does Your Cohort Matter? Measuring Peer Effects in College Achievement," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 439-464, 07.
Abstract: To estimate peer effects in college achievement we exploit a unique dataset in which individuals have been exogenously assigned to peer groups of about 30 students with whom they are required to spend the majority of their time interacting. This feature enables us to estimate peer effects that are more comparable to changing the entire cohort of peers. Using this broad peer group, we find academic peer effects of much larger magnitude than found in previous studies that have measured peer effects among roommates alone. We find the peer effects persist at a diminishing rate into the sophomore, junior, and senior years, indicating social network peer effects may have long lasting effects on academic achievement. Our findings also suggest that peer effects may be working through study partnerships versus operating through establishment of a social norm of effort.
Handle: RePEc:nbr:nberwo:14032
Template-Type: ReDIF-Paper 1.0
Title: When Does Policy Reform Work? The Case of Central Bank Independence
Classification-JEL: E31; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Simon Johnson
Author-Person: pjo44
Author-Name: Pablo Querubin
Author-Person: pqu97
Author-Name: James A. Robinson
Author-Person: pro179
Note: ME POL
Number: 14033
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14033
File-URL: http://www.nber.org/papers/w14033.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Simon Johnson & Pablo Querubin & James A. Robinson, 2008. "When Does POlicy Reform Work? The Case of Central Bank Independence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 351-429.
Abstract: We argue that the question of whether and when policy reform works should be investigated together with the political economy factors responsible for distortionary policies in the first place. These not only determine the initial distortions, but also often shape policy in the post-reform environment. Distortionary policies are more likely to be adopted when politicians are unconstrained and unaccountable to citizens. This reasoning implies that policy reform should have modest effects in societies where the political system already places constraints on politicians. It also implies, however, that in societies with weak political constraints, which are often those adopting the most distortionary policies, policy reforms may be ineffective because the underlying political economy problems are not typically altered by these reforms. Policy reform should therefore have its largest effect in societies with intermediate levels of constraints. In addition, when policy reform is (partly) effective, it may lead to a deterioration in other (unreformed) components of policy in order to satisfy the underlying demands on politicians - a phenomenon we call the seesaw effect. We provide reduced-form evidence consistent with these ideas by looking at the effect of central bank independence on inflation. The evidence is consistent with the notion that central bank reforms have reduced inflation in societies with intermediate constraints and have had no or little effects in countries with the high and low levels of constraints. We also present some evidence suggesting that, consistent with the seesaw effect, in countries where central bank reforms reduce inflation, government expenditure tends to increase.
Handle: RePEc:nbr:nberwo:14033
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Growth and Crises: The View from Latin America
Classification-JEL: F21; F30; F32; N26; O40
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM ITI
Number: 14034
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14034
File-URL: http://www.nber.org/papers/w14034.pdf
File-Format: application/pdf
Publication-Status: published as Globalisation, Growth and Crises: The View from Latin America Sebastian Edwards† Article first published online: 28 JUN 2008 DOI: 10.1111/j.1467-8462.2008.00498.x ©2008 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Issue Australian Economic Review Australian Economic Review Volume 41, Issue 2, pages 123–140, June 2008
Abstract: In this paper I analyze the role of openness and globalization in Latin America's economic development. The paper is divided into two distinct part: I first (Sections II through IV) provide an analysis of 60 years of the region's economic history, that go form the launching of the Alliance for Progress by the Kennedy Administration in 1961, to the formulation and implementation of the market-oriented reforms of the Washington Consensus in the 1990s and 2000s. I conclude that Latin America's history has been characterized by low growth, high inflation and recurrent external crises. In Section V I deal formally with the costs of crises, and I estimate a number of variance component models of the dynamics of growth. I find that external crises have been more costly in Latin America than in the rest of the world. I also find that the cost of external crises has been inversely related to the degree of openness.
Handle: RePEc:nbr:nberwo:14034
Template-Type: ReDIF-Paper 1.0
Title: The Own and Social Effects of an Unexpected Income Shock: Evidence from the Dutch Postcode Lottery
Classification-JEL: C21; D12
Author-Name: Peter J. Kuhn
Author-Person: pku26
Author-Name: Peter Kooreman
Author-Person: pko248
Author-Name: Adriaan R. Soetevent
Author-Person: pso65
Author-Name: Arie Kapteyn
Author-Person: pka406
Note: LS PE
Number: 14035
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14035
File-URL: http://www.nber.org/papers/w14035.pdf
File-Format: application/pdf
Publication-Status: published as “ The Effects of Lottery Prizes on Winners and Their Neighbors : Evidence from the Dutch Postcode Lottery” (with Peter Koorem a n, Adriaan Soetevent, and A rie Kapteyn) American Economic Review 101 (5) (August 2011). pp 2226 - 2247
Abstract: In the Dutch Postcode Lottery a postal code (19 households on average) is randomly selected weekly, and prizes - consisting of cash and a new BMW - are awarded to lottery participants living in that postal code. On average, this generates a temporary, unexpected income shock equal to about eight months of income for about one third of the households in a typical winning code, while leaving the incomes of nonwinning, neighboring households unaffected. We study the responses of consumption and reported happiness of both winners and nonwinners to these shocks. Consistent with simple models of in-kind transfers, the overwhelming majority of households who won a BMW convert it into cash. With the exception of food away from home, the only 'own' effects of cash winnings we detect are on durables expenditures and car consumption; these results support a version of the permanent income hypothesis in which durable spending is used to smooth consumption. We detect social effects of neighbors' winnings on two types of consumption: cars and exterior home renovations. Six months after the fact, winning the lottery does not make households happier, nor do neighbors' winnings reduce happiness.
Handle: RePEc:nbr:nberwo:14035
Template-Type: ReDIF-Paper 1.0
Title: Who Gentrifies Low-Income Neighborhoods?
Classification-JEL: J15; J60; R23
Author-Name: Terra McKinnish
Author-Name: Randall Walsh
Author-Person: pwa222
Author-Name: Kirk White
Author-Person: pwh3
Note: LS PE
Number: 14036
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14036
File-URL: http://www.nber.org/papers/w14036.pdf
File-Format: application/pdf
Publication-Status: published as McKinnish, Terra & Walsh, Randall & Kirk White, T., 2010. "Who gentrifies low-income neighborhoods?," Journal of Urban Economics, Elsevier, vol. 67(2), pages 180-193, March.
Abstract: This paper uses confidential Census data, specifically the 1990 and 2000 Census Long Form data, to study the demographic processes underlying the gentrification of low-income urban neighborhoods during the 1990's. In contrast to previous studies, the analysis is conducted at the more refined census-tract level with a narrower definition of gentrification and more closely matched comparison neighborhoods. The analysis is also richly disaggregated by demographic characteristic, uncovering differential patterns by race, education, age and family structure that would not have emerged in the more aggregate analysis in previous studies. The results provide no evidence of displacement of low-income non-white households in gentrifying neighborhoods. The bulk of the increase in average family income in gentrifying neighborhoods is attributed to black high school graduates and white college graduates. The disproportionate retention and income gains of the former and the disproportionate in-migration of the latter are distinguishing characteristics of gentrifying U.S. urban neighborhoods in the 1990's.
Handle: RePEc:nbr:nberwo:14036
Template-Type: ReDIF-Paper 1.0
Title: Health, Human Capital, and African American Migration Before 1910
Classification-JEL: I1; I2; J1; J2; N3
Author-Name: Trevon D. Logan
Author-Person: plo110
Note: DAE EH
Number: 14037
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14037
File-URL: http://www.nber.org/papers/w14037.pdf
File-Format: application/pdf
Publication-Status: published as Logan, Trevon D., 2009. "Health, human capital, and African-American migration before 1910," Explorations in Economic History, Elsevier, vol. 46(2), pages 169-185, April.
Abstract: This is the first paper to document the effect of health on the migration propensities of African Americans in the American past. Using both IPUMS and the Colored Troops Sample of the Civil War Union Army Data, I estimate the effects of literacy and health on the migration propensities of African Americans from 1870 to 1910. I find that literacy and health shocks were strong predictors of migration and the stock of health was not. There were differential selection propensities based on slave status - former slaves were less likely to migrate given a specific health shock than free blacks. Counterfactuals suggest that as much as 35% of the difference in the mobility patterns of former slaves and free blacks is explained by differences in their human capital, and more than 20% of that difference is due to health alone. Overall, the selection effect of literacy on migration is reduced by one-tenth to one-third once health is controlled for. The low levels of human capital accumulation and rates of mobility for African Americans after the Civil War are partly explained by the poor health status of slaves and their immediate descendants.
Handle: RePEc:nbr:nberwo:14037
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Earnings Disregards on the Behavior of Low Income Families
Classification-JEL: H53; I38; J22
Author-Name: Jordan D. Matsudaira
Author-Person: pma918
Author-Name: Rebecca M. Blank
Author-Person: pbl56
Note: LS PE
Number: 14038
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14038
File-URL: http://www.nber.org/papers/w14038.pdf
File-Format: application/pdf
Publication-Status: published as The Impact of Earnings Disregards on the Behavior of Low-Income Families Jordan D. Matsudaira, Rebecca M. Blank Article first published online: 10 OCT 2013 DOI: 10.1002/pam.21725 © 2013 by the Association for Public Policy Analysis and Management Issue Journal of Policy Analysis and Management Journal of Policy Analysis and Management Volume 33, Issue 1, pages 7–35, Winter 2014
Abstract: This paper investigates the impact of changes in earnings disregards for welfare assistance received by single mothers following welfare reform in 1996. Some states adopted much higher earnings disregards (women could work full time and still receive welfare), while other states did not. We explore the effect of these changes on women's labor supply and income using several data sources and multiple estimation strategies. Our results indicate these changes had little effect on labor supply or income. We show this is because few women used these earnings disregards. This is surprising and we discuss why this might occur.
Handle: RePEc:nbr:nberwo:14038
Template-Type: ReDIF-Paper 1.0
Title: Return Migration as a Channel of Brain Gain
Classification-JEL: F22; J61; O15
Author-Name: Karin Mayr
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 14039
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14039
File-URL: http://www.nber.org/papers/w14039.pdf
File-Format: application/pdf
Abstract: Recent theoretical and empirical studies have emphasized the fact that the prospect of international migration increases the expected returns to skills in poor countries, linking the possibility of migrating (brain drain) with incentives to higher education (brain gain). If emigration is uncertain and some of the highly educated remain, such a channel may, at least in part, counterbalance the negative effects of brain drain. Moreover, recent empirical evidence seems to show that temporary migration is widespread among highly skilled migrants (such as Eastern Europeans in Western Europe and Asians in the U.S.). This paper develops a simple tractable overlapping generations model that provides an economic rationale for return migration and which predicts who will migrate and who will return among agents with heterogeneous abilities. We use parameter values from the literature and the data on return migration to simulate the model and quantify the effects of increased openness on human capital and wages of the sending countries. We find that, for plausible values of the parameters, the return migration channel is very important and combined with the incentive channel reverses the brain drain into significant brain gain for the sending country.
Handle: RePEc:nbr:nberwo:14039
Template-Type: ReDIF-Paper 1.0
Title: Bayesian Learning in Social Networks
Classification-JEL: C72; D83
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Munther A. Dahleh
Author-Name: Ilan Lobel
Author-Name: Asuman Ozdaglar
Note: PE
Number: 14040
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14040
File-URL: http://www.nber.org/papers/w14040.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Munther A. Dahleh & Ilan Lobel & Asuman Ozdaglar, 2011. "Bayesian Learning in Social Networks," Review of Economic Studies, Oxford University Press, vol. 78(4), pages 1201-1236.
Abstract: We study the perfect Bayesian equilibrium of a model of learning over a general social network. Each individual receives a signal about the underlying state of the world, observes the past actions of a stochastically-generated neighborhood of individuals, and chooses one of two possible actions. The stochastic process generating the neighborhoods defines the network topology (social network). The special case where each individual observes all past actions has been widely studied in the literature. We characterize pure-strategy equilibria for arbitrary stochastic and deterministic social networks and characterize the conditions under which there will be asymptotic learning -- that is, the conditions under which, as the social network becomes large, individuals converge (in probability) to taking the right action. We show that when private beliefs are unbounded (meaning that the implied likelihood ratios are unbounded), there will be asymptotic learning as long as there is some minimal amount of "expansion in observations". Our main theorem shows that when the probability that each individual observes some other individual from the recent past converges to one as the social network becomes large, unbounded private beliefs are sufficient to ensure asymptotic learning. This theorem therefore establishes that, with unbounded private beliefs, there will be asymptotic learning an almost all reasonable social networks. We also show that for most network topologies, when private beliefs are bounded, there will not be asymptotic learning. In addition, in contrast to the special case where all past actions are observed, asymptotic learning is possible even with bounded beliefs in certain stochastic network topologies.
Handle: RePEc:nbr:nberwo:14040
Template-Type: ReDIF-Paper 1.0
Title: Effects of Regulation on Drug Launch and Pricing in Interdependent Markets
Classification-JEL: I11; I18; K2; L5; L65
Author-Name: Patricia M. Danzon
Author-Person: pda291
Author-Name: Andrew J. Epstein
Note: EH IO LE
Number: 14041
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14041
File-URL: http://www.nber.org/papers/w14041.pdf
File-Format: application/pdf
Abstract: This study examines the effect of price regulation and competition on launch timing and pricing of new drugs. Our data cover launch experience in 15 countries for drugs in 12 therapeutic classes that experienced significant innovation over the decade 1992-2003. We use prices of established products as a measure of the direct effect of a country's own regulatory system, and find that launch timing and prices of innovative drugs are influenced by prices of established products. Thus, if price regulation reduces drug prices, it contributes to launch delay in the home country. New drug launch hazards and launch prices in low-price countries are also affected by referencing by other, high-price countries, especially within the EU, as expected if manufacturers delay launch in low-price markets to avoid undermining higher prices in other countries. Thus, referencing policies adopted in high-price countries can impose welfare loss on low-price countries. Prices of new drugs are influenced mainly by prices of other drugs within the same subclass; however, dynamic competition from new subclasses undermines new drug launch in older subclasses. Association with a local firm accelerates launch only in certain regulated markets. These findings have implications for US proposals to constrain pharmaceutical prices in the US through external referencing and drug importation.
Handle: RePEc:nbr:nberwo:14041
Template-Type: ReDIF-Paper 1.0
Title: Cigarette Taxes and the Transition from Youth to Adult Smoking: Smoking Initiation, Cessation, and Participation
Classification-JEL: I12
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Donald S. Kenkel
Author-Person: pke44
Author-Name: Alan D. Mathios
Author-Person: pma2278
Note: EH
Number: 14042
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14042
File-URL: http://www.nber.org/papers/w14042.pdf
File-Format: application/pdf
Publication-Status: published as DeCicca, Philip & Kenkel, Don & Mathios, Alan, 2008. "Cigarette taxes and the transition from youth to adult smoking: Smoking initiation, cessation, and participation," Journal of Health Economics, Elsevier, vol. 27(4), pages 904-917, July.
Abstract: Policy makers continue to advocate and adopt cigarette taxes as a public health measure. Most previous individual-level empirical studies of cigarette demand are essentially static analyses. In this study, we use longitudinal data to examine the dynamics of young adults' decisions about smoking initiation and cessation. We develop a simple model to highlight the distinctions between smoking initiation, cessation, and participation and show that the price elasticity of smoking participation is a weighted average of corresponding initiation and cessation elasticities, a finding that applies more broadly to other addictive substances as well. The paper's remaining contributions are empirical. We use data from the 1992 wave of the National Education Longitudinal Study, when most of the cohort were high school seniors, and data from the 2000 wave, when they were about 26 years old. The results show that the distinction between initiation and cessation is empirically useful. We also contribute new estimates on the tax-responsiveness of young adult smoking, paying careful attention to the possibility of bias if hard-to-observe differences in anti-smoking sentiment are correlated with state cigarette taxes. We find no evidence that higher taxes prevent smoking initiation, but some evidence that higher taxes are associated with increased cessation.
Handle: RePEc:nbr:nberwo:14042
Template-Type: ReDIF-Paper 1.0
Title: Crossover Inventions And Knowledge Diffusion Of General Purpose Technologies? Evidence From The Electrical Technology
Classification-JEL: N0; O3
Author-Name: Shih-tse Lo
Author-Name: Dhanoos Sutthiphisal
Author-Person: psu129
Note: DAE PR
Number: 14043
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14043
File-URL: http://www.nber.org/papers/w14043.pdf
File-Format: application/pdf
Publication-Status: published as The Journal of Economic History The Journal of Economic History / Volume 70 / Issue 03 / September 2010, pp 744-764 Copyright © The Economic History Association 2010 DOI: http://dx.doi.org/10.1017/S0022050710000604 (About DOI), Published online: 06 September 2010
Abstract: Scholars have long noted the significant impact of general purpose technologies (GPTs) on the economy. However, limited attention has been paid to exploring how they are employed to generate inventions in downstream sectors (crossover inventions), and what factors may facilitate such diffusion. We study these issues by examining the introduction of one of the widely regarded GPTs -- electrical technology -- in the late 19th century U.S. We find that knowledge spillovers between industries (inter-industry spillovers and learning-by-using) had little influence on the geography of crossover inventions as well as the speed and productivity of inventors at making them. Instead, appropriate human capital and an environment promoting inventions in general played a more important role.
Handle: RePEc:nbr:nberwo:14043
Template-Type: ReDIF-Paper 1.0
Title: Taking the Easy Way Out: How the GED Testing Program Induces Students to Drop Out
Classification-JEL: C61
Author-Name: James J. Heckman
Author-Name: John Eric Humphries
Author-Person: phu293
Author-Name: Paul A. LaFontaine
Author-Name: Pedro L. Rodriguez
Note: ED
Number: 14044
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14044
File-URL: http://www.nber.org/papers/w14044.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman & John Eric Humphries & Paul A. LaFontaine & Pedro L. Rodr�guez, 2012. "Taking the Easy Way Out: How the GED Testing Program Induces Students to Drop Out," Journal of Labor Economics, University of Chicago Press, vol. 30(3), pages 495 - 520.
Abstract: The option to obtain a General Education Development (GED) certificate changes the incentives facing high school students. This paper evaluates the effect of three different GED policy innovations on high school graduation rates. A six point decrease in the GED pass rate due to an increase in national passing standards produced a 1.3 point decline in overall high school dropout rates. The introduction of a GED certification program in high schools in Oregon produced a four percent decrease in high school graduation rates. Introduction of GED certificates for civilians in California increased the high school dropout rate by 3 points. The GED program induces students to drop out of high school.
Handle: RePEc:nbr:nberwo:14044
Template-Type: ReDIF-Paper 1.0
Title: Does Trade Foster Contract Enforcement?
Classification-JEL: F10; O17; O19; O24
Author-Name: James E. Anderson
Author-Person: pan2
Note: ITI LE
Number: 14045
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14045
File-URL: http://www.nber.org/papers/w14045.pdf
File-Format: application/pdf
Publication-Status: published as James Anderson, 2009. "Does trade foster contract enforcement?," Economic Theory, Springer, vol. 41(1), pages 105-130, October.
Abstract: Contract enforcement is probabilistic, but the probability depends on rules and processes. A stimulus to trade may induce traders to alter rules or processes to improve enforcement. In the model of this paper, such a positive knock-on effect occurs when the elasticity of supply of traders is sufficiently high. Negative knock-on is possible when the elasticity is low. Enforcement strategies in competing markets are complements (substitutes) if the supply of traders is sufficiently elastic (inelastic). The model provides a useful structure of endogenous enforcement that gives promise of explaining patterns of institutional development.
Handle: RePEc:nbr:nberwo:14045
Template-Type: ReDIF-Paper 1.0
Title: Consistent Trade Policy Aggregation
Classification-JEL: C43; D58; F10; F13; F17
Author-Name: James E. Anderson
Author-Person: pan2
Note: ITI
Number: 14046
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14046
File-URL: http://www.nber.org/papers/w14046.pdf
File-Format: application/pdf
Publication-Status: published as James E. Anderson, 2009. "Consistent Trade Policy Aggregation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 903-927, 08.
Abstract: Most empirical policy work requires the aggregation of policies. Trade policy aggregation exemplifies the aggregation problem poignantly, with thousands of highly dispersed trade barriers. This paper provides methods of policy aggregation that are consistent with two common objectives of empirical work. One is to preserve real income. The other is to preserve the real volume of activity in the parts of the economy being aggregated. Both objectives must be achieved for consistent multi-country policy modeling. An application to India shows that the standard atheoretic method of aggregation overstates India's real income by around 3 times the global gains from free trade.
Handle: RePEc:nbr:nberwo:14046
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Policy over the Real Business Cycle: A Positive Theory
Classification-JEL: D70; E62; H60
Author-Name: Marco Battaglini
Author-Person: pba170
Author-Name: Stephen Coate
Author-Person: pco66
Note: PE POL EFG
Number: 14047
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14047
File-URL: http://www.nber.org/papers/w14047.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Economic Theory Volume 148, Issue 6, November 2013, Pages 2223–2265 Cover image Fiscal policy over the real business cycle: A positive theory
Abstract: This paper presents a political economy theory of the behavior of fiscal policy over the business cycle. The theory predicts that, in both booms and recessions, fiscal policies are set so that the marginal cost of public funds obeys a submartingale. In the short run, fiscal policy can be pro-cyclical with government debt spiking up upon entering a boom. However, in the long run, fiscal policy is counter-cyclical with debt increasing in recessions and decreasing in booms. Government spending increases in booms and decreases during recessions, while tax rates decrease during booms and increase in recessions. Data on tax rates from the G7 countries supports the submartingale prediction, and the correlations between fiscal policy variables and national income implied by the theory are consistent with much of the existing evidence from the U.S. and other countries.
Handle: RePEc:nbr:nberwo:14047
Template-Type: ReDIF-Paper 1.0
Title: Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels
Classification-JEL: E32
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: James A. Kahn
Author-Person: pka18
Note: EFG
Number: 14048
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14048
File-URL: http://www.nber.org/papers/w14048.pdf
File-Format: application/pdf
Publication-Status: published as Steven J. Davis & James A. Kahn, 2008. "Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 155-80, Fall.
Abstract: We review evidence on the Great Moderation in conjunction with evidence about volatility trends at the micro level. We combine the two types of evidence to develop a tentative story for important components of the aggregate volatility decline and its consequences. The key ingredients are declines in firm-level volatility and aggregate volatility -- most dramatically in the durable goods sector -- but the absence of a decline in household consumption volatility and individual earnings uncertainty. Our explanation for the aggregate volatility decline stresses improved supply-chain management, particularly in the durable goods sector, and, less important, a shift in production and employment from goods to services. We provide evidence that better inventory control made a substantial contribution to declines in firm-level and aggregate volatility. Consistent with this view, if we look past the turbulent 1970s and early 1980s much of the moderation reflects a decline in high frequency (short-term) fluctuations. While these developments represent efficiency gains, they do not imply (nor is there evidence for) a reduction in economic uncertainty faced by individuals and households.
Handle: RePEc:nbr:nberwo:14048
Template-Type: ReDIF-Paper 1.0
Title: An Anatomy Of Credit Booms: Evidence From Macro Aggregates And Micro Data
Classification-JEL: E32; E44; E51; F3; G21
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Marco E. Terrones
Author-Person: pte49
Note: IFM
Number: 14049
Creation-Date: 2008-05
Order-URL: http://www.nber.org/papers/w14049
File-URL: http://www.nber.org/papers/w14049.pdf
File-Format: application/pdf
Abstract: This paper proposes a methodology for measuring credit booms and uses it to identify credit booms in emerging and industrial economies over the past four decades. In addition, we use event study methods to identify the key empirical regularities of credit booms in macroeconomic aggregates and micro-level data. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations, widening external deficits and managed exchange rates. Micro data show a strong association between credit booms and firm-level measures of leverage, firm values, and external financing, and bank-level indicators of banking fragility. Credit booms in industrial and emerging economies show three major differences: (1) credit booms and the macro and micro fluctuations associated with them are larger in emerging economies, particularly in the nontradables sector; (2) not all credit booms end in financial crises, but most emerging markets crises were associated with credit booms; and (3) credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
Handle: RePEc:nbr:nberwo:14049
Template-Type: ReDIF-Paper 1.0
Title: Second-Best Institutions
Classification-JEL: O1
Author-Name: Dani Rodrik
Author-Person: pro60
Note: EFG PE POL
Number: 14050
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14050
File-URL: http://www.nber.org/papers/w14050.pdf
File-Format: application/pdf
Publication-Status: published as Dani Rodrik, 2008. "Second-Best Institutions," American Economic Review, American Economic Association, vol. 98(2), pages 100-104, May.
Abstract: The focus of policy reform in developing countries has moved from getting prices right to getting institutions right, and accordingly countries are increasingly being advised to move towards "best-practice" institutions. This paper argues that appropriate institutions for developing countries are instead "second-best" institutions -- those that take into account context-specific market and government failures that cannot be removed in short order. Such institutions will often diverge greatly from best practice. The argument is illustrated using examples from four areas: contract enforcement, entrepreneurship, trade openness, and macroeconomic stability.
Handle: RePEc:nbr:nberwo:14050
Template-Type: ReDIF-Paper 1.0
Title: A Pragmatic Approach to Capital Account Liberalization
Classification-JEL: F21; F31; F36; F43
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Author-Name: Raghuram Rajan
Author-Person: pra149
Note: CF IFM
Number: 14051
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14051
File-URL: http://www.nber.org/papers/w14051.pdf
File-Format: application/pdf
Publication-Status: published as Eswar S. Prasad & Raghuram G. Rajan, 2008. "A Pragmatic Approach to Capital Account Liberalization," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 149-72, Summer.
Abstract: Cross-country regressions suggest little connection from foreign capital inflows to more rapid economic growth for developing countries and emerging markets. This suggests that the lack of domestic savings is not the primary constraint on growth in these economies, as implicitly assumed in the benchmark neoclassical framework. We explore emerging new theories on both the costs and benefits of capital account liberalization, and suggest how one might adopt a pragmatic approach to the process.
Handle: RePEc:nbr:nberwo:14051
Template-Type: ReDIF-Paper 1.0
Title: The Macroeconomic Implications of Rising Wage Inequality in the United States
Classification-JEL: E21; I21; I31; J2; J31
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Kjetil Storesletten
Author-Person: pst4
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG LS
Number: 14052
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14052
File-URL: http://www.nber.org/papers/w14052.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2010. "The Macroeconomic Implications of Rising Wage Inequality in the United States," Journal of Political Economy, University of Chicago Press, vol. 118(4), pages 681-722, 08.
Abstract: In recent decades, the US wage structure has been transformed by a rising college premium, a narrowing gender gap, and increasing persistent and transitory residual wage dispersion. This paper explores the implications of these changes for cross-sectional inequality in hours worked, earnings and consumption, and for welfare. The framework for the analysis is an incomplete-markets overlapping-generations model in which individuals choose education and form households, and households choose consumption and intra-family time allocation. An explicit production technology underlies equilibrium prices for labor inputs differentiated by gender and education. The model is parameterized using micro data from the PSID, the CPS and the CEX. With the changing wage structure as the only primitive force, the model can account for the key trends in cross-sectional US data. We also assess the role played by education, labor supply, and saving in providing insurance against shocks, and in exploiting opportunities presented by changes in the relative prices of different types of labor.
Handle: RePEc:nbr:nberwo:14052
Template-Type: ReDIF-Paper 1.0
Title: Health, Stress, and Social Networks: Evidence from Union Army Veterans
Classification-JEL: I12; Z13
Author-Name: Dora L. Costa
Author-Person: pco358
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: AG DAE
Number: 14053
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14053
File-URL: http://www.nber.org/papers/w14053.pdf
File-Format: application/pdf
Abstract: We find that veterans of the Union Army who faced greater wartime stress (as measured by higher battlefield mortality rates) experienced higher mortality rates at older ages, but that men who were from more cohesive companies were statistically significantly less likely to be affected by wartime stress. Our results hold for overall mortality, mortality from ischemic heart disease and stroke, and new diagnoses of arteriosclerosis. Our findings represent one of the first long-run health follow-ups of the interaction between stress and social networks in a human population in which both stress and social networks are arguably exogeneous.
Handle: RePEc:nbr:nberwo:14053
Template-Type: ReDIF-Paper 1.0
Title: Do Peso Problems Explain the Returns to the Carry Trade?
Classification-JEL: F31
Author-Name: A. Craig Burnside
Author-Person: pbu20
Author-Name: Martin S. Eichenbaum
Author-Person: pei4
Author-Name: Isaac Kleshchelski
Author-Name: Sergio Rebelo
Note: AP EFG IFM ME
Number: 14054
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14054
File-URL: http://www.nber.org/papers/w14054.pdf
File-Format: application/pdf
Publication-Status: published as Craig Burnside & Martin Eichenbaum & Isaac Kleshchelski & Sergio Rebelo, 2011. "Do Peso Problems Explain the Returns to the Carry Trade?," Review of Financial Studies, Society for Financial Studies, vol. 24(3), pages 853-891.
Abstract: We study the properties of the carry trade, a currency speculation strategy in which an investor borrows low-interest-rate currencies and lends high-interest-rate currencies. This strategy generates payoffs which are on average large and uncorrelated with traditional risk factors. We argue that these payoffs reflect a peso problem. The underlying peso event features high values of the stochastic discount factor rather than very large negative payoffs.
Handle: RePEc:nbr:nberwo:14054
Template-Type: ReDIF-Paper 1.0
Title: Asset Allocation and Location over the Life Cycle with Survival-Contingent Payouts
Classification-JEL: G11; G22; G23; H55; J26; J32
Author-Name: Wolfram J. Horneff
Author-Name: Raimond H. Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Michael Z. Stamos
Note: AG LS PE
Number: 14055
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14055
File-URL: http://www.nber.org/papers/w14055.pdf
File-Format: application/pdf
Abstract: This paper shows how lifelong survival-contingent payouts can enhance investor wellbeing in the context of a portfolio choice model which integrates uninsurable labor income and asymmetric mortality expectations. Our model generates optimal asset location patterns indicating how much to hold in liquid versus illiquid survival-contingent payouts over the lifetime, and also asset allocation paths, showing how to invest in stocks versus bonds. We confirm that the investor will gradually move money out of her liquid saving into survival-contingent assets to retirement and beyond, thereby enhancing her welfare by as much as 50 percent. The results are also robust to the introduction of uninsurable consumption shocks in housing expenses, income flows during the worklife and retirement, sudden changes in health status, and medical expenses.
Handle: RePEc:nbr:nberwo:14055
Template-Type: ReDIF-Paper 1.0
Title: Big-Think Regionalism: A Critical Survey
Classification-JEL: F02; F1; F13; F15; F55
Author-Name: Richard Baldwin
Author-Person: pba124
Note: ITI
Number: 14056
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14056
File-URL: http://www.nber.org/papers/w14056.pdf
File-Format: application/pdf
Publication-Status: published as in Regional Rules in the Global Trading System. Estevadeordal, Suominen, Teh (Editors) pp 17-95
Abstract: Small Think Regionalism focused on the Vinerian question: "Would a nation gain from joining a trade bloc?" Big Think Regionalism considers regionalism's systemic impact on the world trading system, focusing mainly on two questions: "Does spreading regionalism harm world welfare?" and "Does regionalism help or hinder multilateralism?" This paper synthesizes and critiques the theoretical literature in an attempt to identify the insights that are useful for thinking about regionalism's systemic impact in the new century.
Handle: RePEc:nbr:nberwo:14056
Template-Type: ReDIF-Paper 1.0
Title: Bringing Science to Market: Commercializing from NIH SBIR Awards
Classification-JEL: I28; O38
Author-Name: Albert N. Link
Author-Person: pli161
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: EH IO PR
Number: 14057
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14057
File-URL: http://www.nber.org/papers/w14057.pdf
File-Format: application/pdf
Publication-Status: published as Albert Link & Christopher Ruhm, 2009. "Bringing science to market: commercializing from NIH SBIR awards," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 18(4), pages 381-402.
Abstract: We offer empirical information on the correlates of commercialization activity for research projects funded through the U.S. National Institutes of Health's (NIH's) Small Business Innovation Research (SBIR) award program. Based on this analysis we suggest possible recommendations for improving this aspect of the performance of NIH's SBIR program. Specifically, we estimate a model of the probability of commercialization as a function of the project's ability to attract additional developmental funding, along with other control variables. We find that additional developmental funding from non-SBIR federal sources and from own internal sources are important predictors of commercialization success, relatively more so than additional developmental funding from venture capitalists. We also find, among other things, that university involvement in the underlying research increases the probability of commercialization. Thus, these factors should be considered by NIH when making awards, if increased commercialization is an objective.
Handle: RePEc:nbr:nberwo:14057
Template-Type: ReDIF-Paper 1.0
Title: Market Liquidity, Asset Prices and Welfare
Classification-JEL: E44; E58; G12; G18
Author-Name: Jennifer Huang
Author-Person: phu418
Author-Name: Jiang Wang
Note: AP
Number: 14058
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14058
File-URL: http://www.nber.org/papers/w14058.pdf
File-Format: application/pdf
Publication-Status: published as Huang, Jennifer & Wang, Jiang, 2010. "Market liquidity, asset prices, and welfare," Journal of Financial Economics, Elsevier, vol. 95(1), pages 107-127, January.
Abstract: This paper presents an equilibrium model for the demand and supply of liquidity and its impact on asset prices and welfare. We show that when constant market presence is costly, purely idiosyncratic shocks lead to endogenous demand of liquidity and large price deviations from fundamentals. Moreover, market forces fail to lead to efficient supply of liquidity, which calls for potential policy interventions. However, we demonstrate that different policy tools can yield different efficiency consequences. For example, lowering the cost of supplying liquidity on the spot (e.g., through direct injection of liquidity or relaxation of ex post margin constraints) can decrease welfare while forcing more liquidity supply (e.g., through coordination of market participants) can improve welfare.
Handle: RePEc:nbr:nberwo:14058
Template-Type: ReDIF-Paper 1.0
Title: Liquidation Values and the Credibility of Financial Contract Renegotiation: Evidence from U.S. Airlines
Classification-JEL: G33; G34; K12; L93
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Note: CF IO LE
Number: 14059
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14059
File-URL: http://www.nber.org/papers/w14059.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Nittai K. Bergman, 2008. "Liquidation Values and the Credibility of Financial Contract Renegotiation: Evidence from U.S. Airlines," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1635-1677, November.
Abstract: How do liquidation values affect financial contract renegotiation? While the 'incomplete contracting' theory of financial contracting predicts that liquidation values determine the allocation of bargaining power between creditors and debtors, there is little empirical evidence on financial contract renegotiations and the role asset values play in such bargaining. This paper attempts to fill this gap. We develop an incomplete-contracting model of financial contract renegotiation and estimate it using data on the airline industry in the United States. We find that airlines successfully renegotiate their lease obligations downwards when their financial position is sufficiently poor and when the liquidation value of their fleet is low. Our results show that strategic renegotiation is common in the airline industry. Moreover, the results emphasize the importance of the incomplete contracting perspective to real world financial contract renegotiation.
Handle: RePEc:nbr:nberwo:14059
Template-Type: ReDIF-Paper 1.0
Title: Plant-Size Distribution and Cross-Country Income Differences
Classification-JEL: O1
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Andrew Charlton
Author-Name: Fabio Kanczuk
Author-Person: pka78
Note: EFG LS
Number: 14060
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14060
File-URL: http://www.nber.org/papers/w14060.pdf
File-Format: application/pdf
Publication-Status: published as Plant Size Distribution and Cross-Country Income Differences, Laura Alfaro, Andrew Charlton, Fabio Kanczuk. in NBER International Seminar on Macroeconomics 2008, Frankel and Pissarides. 2009
Abstract: We investigate, using plant-level data for 79 developed and developing countries, whether differences in the allocation of resources across heterogeneous plants are a significant determinant of cross-country differences in income per worker. For this purpose, we use a standard version of the neoclassical growth model augmented to incorporate monopolistic competition among heterogeneous plants. For our preferred calibration, the model explains 58% of the log variance of income per worker. This figure should be compared to the 42% success rate of the usual model.
Handle: RePEc:nbr:nberwo:14060
Template-Type: ReDIF-Paper 1.0
Title: Much Ado About Nothing: American Jobs and the Rise of Service Outsourcing to China and India
Classification-JEL: F16
Author-Name: Runjuan Liu
Author-Person: pli274
Author-Name: Daniel Trefler
Author-Person: ptr44
Note: ITI LS
Number: 14061
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14061
File-URL: http://www.nber.org/papers/w14061.pdf
File-Format: application/pdf
Abstract: We examine the impact on U.S. labor markets of offshore outsourcing in services to China and India. We also consider the reverse flow or 'inshoring' which is the sale of services produced in the United States to unaffiliated buyers in China and India. Using March-to-March matched CPS data for 1996-2006 we examine the impacts on (1) occupation and industry switching, (2) weeks spent unemployed as a share of weeks in the labor force, and (3) earnings. We precisely estimate small positive effects of inshoring and smaller negative effects of offshore outsourcing. The net effect is positive. To illustrate how small the effects are, suppose that over the next nine years all of inshoring and offshore outsourcing grew at rates experienced during 1996-2005 in business, professional and technical services i.e., in segments where China and India have been particularly strong. Then workers in occupations that are exposed to inshoring and offshore outsourcing (1) would switch 4-digit occupations 2 percent less often, (2) would spend 0.1 percent less time unemployed, and (3) would earn 1.5 percent more. These are not annual changes - they are changes over nine years - and are thus best described as small positive effects.
Handle: RePEc:nbr:nberwo:14061
Template-Type: ReDIF-Paper 1.0
Title: Who Benefits from Tax-Advantaged Employee Benefits?: Evidence from University Parking
Classification-JEL: H25; H32; J32; K35; K49
Author-Name: Michael D. Grubb
Author-Person: pgr239
Author-Name: Paul Oyer
Author-Person: poy2
Note: LE LS PE
Number: 14062
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14062
File-URL: http://www.nber.org/papers/w14062.pdf
File-Format: application/pdf
Abstract: We use university parking permits to study how firms and employees split the value of employee benefit tax subsidies. Starting in 1998, the IRS allowed employees to pay for parking passes with pre-tax income. This subsidized the parking pass purchases of faculty and staff, but did not affect students. We show that the typical university raised its parking rates by 8-10% extra when it implemented a pre-tax payment system, but that this increase was the same for those affected by the tax change and those that were not affected. We conclude that university employees captured much of the new tax benefit, that faculty and staff that purchase permits benefited relative to those that do not purchase permits, and that students that purchase permits were made worse off relative to those that do not buy permits. We discuss what these results suggest about universities' objectives in setting their parking prices and about the demand for university parking.
Handle: RePEc:nbr:nberwo:14062
Template-Type: ReDIF-Paper 1.0
Title: The Young, the Old, and the Restless: Demographics and Business Cycle Volatility
Classification-JEL: E0; E3
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Henry E. Siu
Author-Person: psi89
Note: EFG
Number: 14063
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14063
File-URL: http://www.nber.org/papers/w14063.pdf
File-Format: application/pdf
Publication-Status: published as Nir Jaimovich & Henry E. Siu, 2009. "The Young, the Old, and the Restless: Demographics and Business Cycle Volatility," American Economic Review, American Economic Association, vol. 99(3), pages 804-26, June.
Abstract: We investigate the consequences of demographic change for business cycle analysis. We find that changes in the age composition of the labor force account for a significant fraction of the variation in business cycle volatility observed in the U.S. and other G7 economies. During the postwar period, these countries experienced dramatic demographic change, although details regarding timing and nature differ from place to place. Using panel-data methods, we exploit this variation to show that the age composition of the workforce has a large and statistically significant effect on cyclical volatility. We conclude by relating these findings to the recent decline in U.S. business cycle volatility. Through simple quantitative accounting exercises, we find that demographic change accounts for approximately one-fifth to one-third of this moderation.
Handle: RePEc:nbr:nberwo:14063
Template-Type: ReDIF-Paper 1.0
Title: Schools, Skills, and Synapses
Classification-JEL: A12
Author-Name: James J. Heckman
Note: CH ED LS
Number: 14064
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14064
File-URL: http://www.nber.org/papers/w14064.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman, 2008. "Schools, Skills, And Synapses," Economic Inquiry, Western Economic Association International, vol. 46(3), pages 289-324, 07.
Abstract: This paper discusses (a) the role of cognitive and noncognitive ability in shaping adult outcomes, (b) the early emergence of differentials in abilities between children of advantaged families and children of disadvantaged families, (c) the role of families in creating these abilities, (d) adverse trends in American families, and (e) the effectiveness of early interventions in offsetting these trends. Practical issues in the design and implementation of early childhood programs are discussed.
Handle: RePEc:nbr:nberwo:14064
Template-Type: ReDIF-Paper 1.0
Title: The Persistence of Teacher-Induced Learning Gains
Classification-JEL: I2; I21; J20; J24; J38
Author-Name: Brian A. Jacob
Author-Name: Lars Lefgren
Author-Person: ple392
Author-Name: David Sims
Note: CH ED LS PE
Number: 14065
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14065
File-URL: http://www.nber.org/papers/w14065.pdf
File-Format: application/pdf
Publication-Status: published as Jacob, Brian, Lefgren, Lars and David Sims. (2010). "The Persistence of Teacher-Induced Learning Gains." Journal of Human Resources 45(4): 915-943.
Abstract: Educational interventions are often narrowly targeted and temporary, and evaluations often focus on the short-run impacts of the intervention. Insofar as the positive effects of educational interventions fadeout over time, however, such assessments may be misleading. In this paper, we develop a simple statistical framework to empirically assess the persistence of treatment effects in education. To begin, we present a simple model of student learning that incorporates permanent as well as transitory learning gains. Using this model, we demonstrate how the parameter of interest - the persistence of a particular measurable education input - can be recovered via instrumental variables as a particular local average treatment effect. We initially motivate this strategy in the context of teacher quality, but then generalize the model to consider educational interventions more generally. Using administrative data that links students and teachers, we construct measures of teacher effectiveness and then estimate the persistence of these teacher value-added measures on student test scores. We find that teacher-induced gains in math and reading achievement quickly erode. In most cases, our point estimates suggest a one-year persistence of about one-fifth and rule out a one-year persistence rate higher than one-third.
Handle: RePEc:nbr:nberwo:14065
Template-Type: ReDIF-Paper 1.0
Title: The Back Story of Twentieth-Century Art
Classification-JEL: J01
Author-Name: David Galenson
Note: LS
Number: 14066
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14066
File-URL: http://www.nber.org/papers/w14066.pdf
File-Format: application/pdf
Publication-Status: published as The Back Story of Twentieth-Century Art, David W. Galenson. in Conceptual Revolutions in Twentieth-Century Art, Galenson. 2009
Abstract: The back story of twentieth-century art concerns the changing intellectual, economic, and technological setting that would cause the art of the past century to be fundamentally different from that of all earlier times. The single most important change involved the structure of the market for advanced art. Innovation had always been the hallmark of important art, but since the Renaissance nearly all artists were constrained in the degree to which they could innovate by the need to satisfy powerful individual patrons or institutions. The overthrow of the Salon monopoly of the art market in Paris and the rise of a competitive market for art in the late nineteenth century removed this constraint, and gave advanced artists an unprecedented freedom to innovate. Conspicuous innovation subsequently became necessary for important modern art. All artists recognized the increased demand for innovation, but it would be conceptual artists who could take advantage of it more quickly than their experimental counterparts. Early in the twentieth century Pablo Picasso became the prototype of the conceptual innovator who maximized the economic value of his inventiveness in the new market setting, and during the remainder of the century, a series of young conceptual artists followed him in producing more radical innovations, and engaging in more extreme new forms of behavior, than had ever existed before, making this an era of revolutionary artistic change.
Handle: RePEc:nbr:nberwo:14066
Template-Type: ReDIF-Paper 1.0
Title: On the Role and Design of Dispute Settlement Procedures in International Trade Agreements
Classification-JEL: D02; D78; D86; F13; K12; K33
Author-Name: Giovanni Maggi
Author-Person: pma1315
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 14067
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14067
File-URL: http://www.nber.org/papers/w14067.pdf
File-Format: application/pdf
Abstract: Formal economic analysis of trade agreements typically treats disputes as synonymous with concerns about enforcement. But in reality, most WTO disputes involve disagreements of interpretation concerning the agreement, or instances where the agreement is simply silent. And some have suggested that the WTO's Dispute Settlement Body (DSB) might serve a useful purpose by granting "exceptions" to rigid contractual obligations in some circumstances. In each of these three cases, the role played by the DSB amounts to "completing" various dimensions of an incomplete contract. Moreover, there is a debate among legal scholars on whether or not precedent-setting in DSB rulings may enhance the performance of the institution. All of this points to the importance of understanding the implications of the different possible degrees of activism in the role played by the DSB. In this paper we bring formal analysis to bear on this broad question. We characterize the choice of contractual form and DSB role that is optimal for governments under various contracting conditions. A novel feature of our approach is that it highlights the interaction between the design of the contract and the design of the dispute settlement procedure, and it views these as two components of a single over-arching institutional design problem.
Handle: RePEc:nbr:nberwo:14067
Template-Type: ReDIF-Paper 1.0
Title: Hedge Fund Contagion and Liquidity
Classification-JEL: G11; G12; G18; G23
Author-Name: Nicole M. Boyson
Author-Name: Christof W. Stahel
Author-Name: Rene M. Stulz
Note: CF AP
Number: 14068
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14068
File-URL: http://www.nber.org/papers/w14068.pdf
File-Format: application/pdf
Publication-Status: published as "Hedge Fund Contagion and Liquidity Shocks," with Nicole M. Boyson and Christof W. Stahel, Journal of Finance, 2010, v65(5), 1789-1816.
Abstract: Using hedge fund indices representing eight different styles, we find strong evidence of contagion within the hedge fund sector: controlling for a number of risk factors, the average probability that a hedge fund style index has extreme poor performance (lower 10% tail) increases from 2% to 21% as the number of other hedge fund style indices with extreme poor performance increases from zero to seven. We investigate how changes in funding and asset liquidity intensify this contagion, and find that the likelihood of contagion is high when prime brokerage firms have poor performance (which would be expected to affect hedge fund funding liquidity adversely) and when stock market liquidity (a proxy for asset liquidity) is low. Finally, we examine whether extreme poor performance in the stock, bond, and currency markets is more likely when contagion in the hedge fund sector is high. We find no evidence that contagion in the hedge fund sector is associated with extreme poor performance in the stock and bond markets, but find significant evidence that performance in the currency market is worse when hedge fund contagion is high, consistent with the effects of an unwinding of carry trades.
Handle: RePEc:nbr:nberwo:14068
Template-Type: ReDIF-Paper 1.0
Title: International R&D Spillovers and Institutions
Classification-JEL: O31; O40; O43
Author-Name: David T. Coe
Author-Name: Elhanan Helpman
Author-Person: phe205
Author-Name: Alexander W. Hoffmaister
Author-Person: pho135
Note: ITI
Number: 14069
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14069
File-URL: http://www.nber.org/papers/w14069.pdf
File-Format: application/pdf
Publication-Status: published as Coe, David T. & Helpman, Elhanan & Hoffmaister, Alexander W., 2009. "International R&D spillovers and institutions," European Economic Review, Elsevier, vol. 53(7), pages 723-741, October.
Abstract: The empirical analysis in "International R&D Spillovers" (Coe and Helpman, 1995) is first revisited by applying modern panel cointegration estimation techniques to an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables, such as legal origin and patent protection, in order to allow for parameter heterogeneity based on a country's institutional characteristics. The results suggest that institutional differences are important determinants of total factor productivity and that they impact the degree of R&D spillovers.
Handle: RePEc:nbr:nberwo:14069
Template-Type: ReDIF-Paper 1.0
Title: Professional Partnerships and Matching in Obstetrics
Classification-JEL: D83; I12; J44; L15; L25
Author-Name: Andrew Epstein
Author-Name: Jonathan D. Ketcham
Author-Name: Sean Nicholson
Author-Person: pni108
Note: EH IO LS
Number: 14070
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14070
File-URL: http://www.nber.org/papers/w14070.pdf
File-Format: application/pdf
Abstract: Theory indicates that internally-differentiated professional partnerships can promote matching between heterogeneous consumers and professionals, particularly when consumers have imperfect information or markets have barriers to referrals between firms. We test this in obstetrics markets, relying on random assignment of patients to physicians to generate unbiased measures of a physician's treatment style and skill, and on simulations to measure a physician's specialization. Consumers match to professionals along all three dimensions -- specialization, style and skill -- based on consumers' observed characteristics and unobserved preferences. We conclude that internally-differentiated partnerships promote matching in ways that improve consumers' welfare and health.
Handle: RePEc:nbr:nberwo:14070
Template-Type: ReDIF-Paper 1.0
Title: The Continuing Puzzle of Short Horizon Exchange Rate Forecasting
Classification-JEL: C52; C53; F31; F47
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Author-Name: Vania Stavrakeva
Author-Person: pst618
Note: IFM ME
Number: 14071
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14071
File-URL: http://www.nber.org/papers/w14071.pdf
File-Format: application/pdf
Abstract: Are structural models getting closer to being able to forecast exchange rates at short horizons? Here we argue that misinterpretation of some new out-of-sample tests for nested models, over-reliance on asymptotic test statistics, and failure to sufficiently check robustness to alternative time windows have led many studies to overstate even the relatively thin positive results that have been found. We find that by allowing for common cross-country shocks in our panel forecasting specification, we are able to generate some improvement, but even that improvement is not entirely robust to the forecast window, and much of the gain appears to come from non-structural rather than structural factors.
Handle: RePEc:nbr:nberwo:14071
Template-Type: ReDIF-Paper 1.0
Title: Firm Heterogeneity and the Structure of U.S. Multinational Activity: An Empirical Analysis
Classification-JEL: F1; F23
Author-Name: Stephen Yeaple
Author-Person: pye37
Note: ITI
Number: 14072
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14072
File-URL: http://www.nber.org/papers/w14072.pdf
File-Format: application/pdf
Publication-Status: published as Yeaple, Stephen Ross, 2009. "Firm heterogeneity and the structure of U.S. multinational activity," Journal of International Economics, Elsevier, vol. 78(2), pages 206-215, July.
Abstract: We use firm-level data for U.S. multinational enterprises (MNE) and the model of firm heterogeneity first presented in Helpman, Melitz, and Yeaple (2004) to make four empirical contributions. First, we show that the most productive U.S. firms invest in a larger number of foreign countries and sell more in each country in which they operate. Second, we assess the importance of firm heterogeneity in the structure of MNE activity. Third, we use the model to identify the mechanisms through which country characteristics affect the structure of MNE activity. Finally, we provide a systematic assessment of the model's shortcomings in order to inform the development of new theory.
Handle: RePEc:nbr:nberwo:14072
Template-Type: ReDIF-Paper 1.0
Title: Education and the Age Profile of Literacy into Adulthood
Classification-JEL: F0; I2
Author-Name: Elizabeth Cascio
Author-Person: pca757
Author-Name: Damon Clark
Author-Person: pcl136
Author-Name: Nora Gordon
Author-Person: pgo146
Note: ED
Number: 14073
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14073
File-URL: http://www.nber.org/papers/w14073.pdf
File-Format: application/pdf
Publication-Status: published as Elizabeth Cascio & Damon Clark & Nora Gordon, 2008. "Education and the Age Profile of Literacy into Adulthood," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 47-70, Summer.
Abstract: It is widely documented that U.S. students score below their OECD counterparts on international achievement tests, but it is less commonly known that ultimately, U.S. native adults catch up. In this paper, we explore institutional explanations for differences in the evolution of literacy over young adulthood across wealthy OECD countries. We use an international cross-section of micro data from the International Adult Literacy Survey (IALS); these data show that cross-country differences in the age profile of literacy skills are not due to differences in individual family background, and that relatively high rates of university graduation appears to explain a good part of the U.S. "catch up." The cross-sectional design of the IALS prevents us from controlling for cohort effects, but we use a variety of other data sources to show that cohort effects are likely small in comparison to the differences by age revealed in the IALS. We go on to discuss how particular institutional features of secondary and postsecondary education correlate, at the country level, with higher rates of university completion.
Handle: RePEc:nbr:nberwo:14073
Template-Type: ReDIF-Paper 1.0
Title: Welfare Payments and Crime
Classification-JEL: D91; I38; K42
Author-Name: C. Fritz Foley
Note: LE PE
Number: 14074
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14074
File-URL: http://www.nber.org/papers/w14074.pdf
File-Format: application/pdf
Publication-Status: published as Fritz Foley. "Welfare Payments and Crime." Review of Economics and Statistics, 93, no. 1 (February 2011): 97-112.
Abstract: This paper tests the hypothesis that the timing of welfare payments affects criminal activity. Analysis of daily reported incidents of major crimes in twelve U.S. cities reveals an increase in crime over the course of monthly welfare payment cycles. This increase reflects an increase in crimes that are likely to have a direct financial motivation like burglary, larceny-theft, motor vehicle theft, and robbery, as opposed to other kinds of crime like arson, assault, homicide, and rape. Temporal patterns in crime are observed in jurisdictions in which disbursements are focused at the beginning of monthly welfare payment cycles and not in jurisdictions in which disbursements are relatively more staggered.
Handle: RePEc:nbr:nberwo:14074
Template-Type: ReDIF-Paper 1.0
Title: Trends in Men's Earnings Volatility: What Does the Panel Study of Income Dynamics Show?
Classification-JEL: D31; J31
Author-Name: Donggyun Shin
Author-Person: psh933
Author-Name: Gary Solon
Author-Person: pso215
Note: LS
Number: 14075
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14075
File-URL: http://www.nber.org/papers/w14075.pdf
File-Format: application/pdf
Publication-Status: published as Shin, Donggyun & Solon, Gary, 2011. "Trends in men's earnings volatility: What does the Panel Study of Income Dynamics show?," Journal of Public Economics, Elsevier, vol. 95(7), pages 973-982.
Publication-Status: published as Shin, Donggyun & Solon, Gary, 2011. "Trends in men's earnings volatility: What does the Panel Study of Income Dynamics show?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 973-982, August.
Abstract: Using Panel Study of Income Dynamics data for 1969 through 2004, we examine movements in men's earnings volatility. Like many previous studies, we find that earnings volatility is substantially countercyclical. As for secular trends, we find that men's earnings volatility increased during the 1970s, but did not show a clear trend afterwards until a new upward trend appeared in the last few years. These patterns are broadly consistent with the findings of recent studies based on other data sets.
Handle: RePEc:nbr:nberwo:14075
Template-Type: ReDIF-Paper 1.0
Title: How Social Processes Distort Measurement: The Impact of Survey Nonresponse on Estimates of Volunteer Work
Classification-JEL: J01
Author-Name: Katharine G. Abraham
Author-Person: pab32
Author-Name: Sara E. Helms
Author-Name: Stanley Presser
Note: LS
Number: 14076
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14076
File-URL: http://www.nber.org/papers/w14076.pdf
File-Format: application/pdf
Publication-Status: published as Katharine G. Abraham & Sara Helms & Stanley Presser, 2009. "How Social Processes Distort Measurement: The Impact of Survey Nonresponse on Estimates of Volunteer Work in the United States1," American Journal of Sociology, vol 114(4), pages 1129-1165.
Abstract: Estimates of volunteering in the United States vary greatly from survey to survey and do not show the decline over time common to other measures of social capital. We argue that these anomalies are caused by the social processes that determine survey participation, in particular the propensity of people who do volunteer work to respond to surveys at higher rates than those who do not do volunteer work. Thus surveys with lower responses rates will usually have higher proportions of volunteers, and the decline in response rates over time likely has led to increasing overrepresentation of volunteers. We analyze data from the American Time Use Survey (ATUS) -- the sample for which is drawn from Current Population Survey (CPS) respondents -- together with data from the CPS Volunteering Supplement to demonstrate the effects of survey nonresponse on estimates of volunteering activity and its correlates. CPS respondents who become ATUS respondents report much more volunteering in the CPS than those who become ATUS nonrespondents. This difference is replicated within demographic and other subgroups. Consequently, conventional statistical adjustments for nonresponse cannot correct the resulting bias. Although nonresponse leads to estimates of volunteer activity that are too high, it generally does not affect inferences about the characteristics associated with volunteer activity. We discuss the implications of these findings for the study of other phenomena.
Handle: RePEc:nbr:nberwo:14076
Template-Type: ReDIF-Paper 1.0
Title: Made in America? The New World, the Old, and the Industrial Revolution
Classification-JEL: F11; F14; F43; N10; N70; O40
Author-Name: Gregory Clark
Author-Person: pcl48
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE IFM ITI
Number: 14077
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14077
File-URL: http://www.nber.org/papers/w14077.pdf
File-Format: application/pdf
Publication-Status: published as Gregory Clark & Kevin H. O'Rourke & Alan M. Taylor, 2008. "Made in America? The New World, the Old, and the Industrial Revolution," American Economic Review, American Economic Association, vol. 98(2), pages 523-28, May.
Abstract: For two decades, the consensus explanation of the British Industrial Revolution has placed technological change and the supply side at center stage, affording little or no role for demand or overseas trade. Recently, alternative explanations have placed an emphasis on the importance of trade with New World colonies, and the expanded supply of raw cotton it provided. We test both hypotheses using calibrated general equilibrium models of the British economy and the rest of the world for 1760 and 1850. Neither claim is supported. Trade was vital for the progress of the industrial revolution; but it was trade with the rest of the world, not the American colonies, that allowed Britain to export its rapidly expanding textile output and achieve growth through extreme specialization in response to shifting comparative advantage.
Handle: RePEc:nbr:nberwo:14077
Template-Type: ReDIF-Paper 1.0
Title: Managing Public Investment Funds: Best Practices and New Challenges
Classification-JEL: G18; G2; G22; G23; G28; G32; H5; H54; H55
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: John Piggott
Author-Person: ppi34
Author-Name: Cagri Kumru
Note: AG PE
Number: 14078
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14078
File-URL: http://www.nber.org/papers/w14078.pdf
File-Format: application/pdf
Publication-Status: published as Mitchell, Olivia S. & Piggott, John & Kumru, Cagri, 2008. "Managing public investment funds: best practices and new questions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 7(03), pages 321-356, November.
Abstract: Large publicly-held pools of assets are playing an increasingly prominent role in the global investment arena. We compare three distinct forms of such public funds, namely foreign exchange reserve funds, sovereign wealth funds, and public pension funds, to highlight their differences and similarities. We review previous studies on ways to better secure prudent and economically sound public fund management practices in these funds, as well as how to evaluate their governance and investment policies and how to better protect the assets from political interference. Drawing from the pension and corporate finance literature, we also link their management to governance practices and country-specific characteristics, and contrast those with empirical findings on linkages with corporate governance.
Handle: RePEc:nbr:nberwo:14078
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Productivity Selection and Technology Spillover Effects of Imports
Classification-JEL: F1; F2; O3; O33
Author-Name: Ram C. Acharya
Author-Name: Wolfgang Keller
Author-Person: pke8
Note: ITI PR
Number: 14079
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14079
File-URL: http://www.nber.org/papers/w14079.pdf
File-Format: application/pdf
Publication-Status: published as International Trade, Foreign Direct Investment, and Technology Spillovers, Chapter 19 in B. Hall, N. Rosenberg (eds.), Handbook of the Economics of Innovation, Elsevier North-Holland, 2010
Abstract: Economists emphasize two channels through which import liberalization affects productivity, one operating between and the other within firms. According to the former, import competition triggers market share reallocations between domestic firms with different technological capabilities (selection). At the same time, imports can also improve firms' technologies through learning externalities (spillovers). We present evidence for a sample of industrialized countries over the period 1973 to 2002. First, in the long run, import liberalization lowers productivity in domestic industries through selection. This finding confirms the prediction of models with firm heterogeneity, including Melitz and Ottaviano (2008), in which unilateral liberalization lowers the profits of domestic relative to foreign exporters. Second, if imports involve advanced foreign technologies, liberalization also generates technological learning that can on net raise domestic productivity. Third, for short time horizons of up to three years, a surge in imports typically raises domestic productivity. Because the number of firms at home and abroad does not change much in the short-run, new competition from foreign firms has a pro-competitive effect. We also find that high entry barriers, especially regulation, slow down the process of market share reallocation between firms. Over- all, the results support models in which trade triggers both substantial selection and technological learning.
Handle: RePEc:nbr:nberwo:14079
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Random Coefficient Demand Models: Challenges, Difficulties and Warnings
Classification-JEL: C1; C61; C81; L1; L4
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Konstantinos Metaxoglou
Note: IO TWP
Number: 14080
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14080
File-URL: http://www.nber.org/papers/w14080.pdf
File-Format: application/pdf
Abstract: Empirical exercises in economics frequently involve estimation of highly nonlinear models. The criterion function may not be globally concave or convex and exhibit many local extrema. Choosing among these local extrema is non-trivial for a variety of reasons. In this paper, we analyze the sensitivity of parameter estimates, and most importantly of economic variables of interest, to both starting values and the type of non-linear optimization algorithm employed. We focus on a class of demand models for differentiated products that have been used extensively in industrial organization, and more recently in public and labor. We find that convergence may occur at a number of local extrema, at saddles and in regions of the objective function where the first-order conditions are not satisfied. We find own- and cross-price elasticities that differ by a factor of over 100 depending on the set of candidate parameter estimates. In an attempt to evaluate the welfare effects of a change in an industry's structure, we undertake a hypothetical merger exercise. Our calculations indicate consumer welfare effects can vary between positive values to negative seventy billion dollars depending on the set of parameter estimates used.
Handle: RePEc:nbr:nberwo:14080
Template-Type: ReDIF-Paper 1.0
Title: Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors
Classification-JEL: I20
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: James E. West
Author-Person: pwe191
Note: ED
Number: 14081
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14081
File-URL: http://www.nber.org/papers/w14081.pdf
File-Format: application/pdf
Publication-Status: published as Scott E. Carrell & James E. West, 2010. "Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 409-432, 06.
Abstract: It is difficult to measure teaching quality at the postsecondary level because students typically "self-select" their coursework and their professors. Despite this, student evaluations of professors are widely used in faculty promotion and tenure decisions. We exploit the random assignment of college students to professors in a large body of required coursework to examine how professor quality affects student achievement. Introductory course professors significantly affect student achievement in contemporaneous and follow-on related courses, but the effects are quite heterogeneous across subjects. Students of professors who as a group perform well in the initial mathematics course perform significantly worse in follow-on related math, science, and engineering courses. We find that the academic rank, teaching experience, and terminal degree status of mathematics and science professors are negatively correlated with contemporaneous student achievement, but positively related to follow-on course achievement. Across all subjects, student evaluations of professors are positive predictors of contemporaneous course achievement, but are poor predictors of follow-on course achievement.
Handle: RePEc:nbr:nberwo:14081
Template-Type: ReDIF-Paper 1.0
Title: Common Risk Factors in Currency Markets
Classification-JEL: F31; G12; G15
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Nikolai Roussanov
Author-Person: pro355
Author-Name: Adrien Verdelhan
Author-Person: pve80
Note: AP IFM
Number: 14082
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14082
File-URL: http://www.nber.org/papers/w14082.pdf
File-Format: application/pdf
Publication-Status: published as Hanno Lustig & Nikolai Roussanov & Adrien Verdelhan, 2011. "Common Risk Factors in Currency Markets," Review of Financial Studies, vol 24(11), pages 3731-3777.
Abstract: We identify a 'slope' factor in exchange rates. High interest rate currencies load more on this slope factor than low interest rate currencies. As a result, this factor can account for most of the cross-sectional variation in average excess returns between high and low interest rate currencies. A standard, no-arbitrage model of interest rates with two factors - a country- specific factor and a global factor - can replicate these findings, provided there is sufficient heterogeneity in exposure to the global risk factor. We show that our slope factor is a global risk factor. By investing in high interest rate currencies and borrowing in low interest rate currencies, US investors load up on global risk, particularly during bad times.
Handle: RePEc:nbr:nberwo:14082
Template-Type: ReDIF-Paper 1.0
Title: Subprime Mortgages: What, Where, and to Whom?
Classification-JEL: G1; G2; R2; R31
Author-Name: Christopher J. Mayer
Author-Person: pma212
Author-Name: Karen Pence
Author-Person: ppe919
Note: AP CF PE
Number: 14083
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14083
File-URL: http://www.nber.org/papers/w14083.pdf
File-Format: application/pdf
Abstract: We explore the types of data used to characterize risky subprime lending and consider the geographic dispersion of subprime lending. First, we describe the strengths and weaknesses of three different datasets on subprime mortgages using information from LoanPerformance, HUD, and HMDA. These datasets embody different definitions of subprime mortgages. We show that estimates of the number of subprime originations are somewhat sensitive to which types of mortgages are categorized as subprime. Second, we describe what parts of the country and what sorts of neighborhoods had more subprime originations in 2005, and how these patterns differed for purchase and refinance mortgages. Subprime originations appear to be heavily concentrated in fast-growing parts of the country with considerable new construction, such as Florida, California, Nevada, and the Washington DC area. These locations saw house prices rise at faster-than-average rates relative to their own history and relative to the rest of the country. However, this link between construction, house prices, and subprime lending is not universal, as other markets with high house price growth such as the Northeast did not see especially high rates of subprime usage. Subprime loans were also heavily concentrated in zip codes with more residents in the moderate credit score category and more black and Hispanic residents. Areas with lower income and higher unemployment had more subprime lending, but these associations are smaller in magnitude.
Handle: RePEc:nbr:nberwo:14083
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy: An Essential Tool for Informed Consumer Choice?
Classification-JEL: D14
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 14084
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14084
File-URL: http://www.nber.org/papers/w14084.pdf
File-Format: application/pdf
Abstract: Increasingly, individuals are in charge of their own financial security and are confronted with ever more complex financial instruments. However, there is evidence that many individuals are not well-equipped to make sound saving decisions. This paper demonstrates widespread financial illiteracy among the U.S. population, particularly among specific demographic groups. Those with low education, women, African-Americans, and Hispanics display particularly low levels of literacy. Financial literacy impacts financial decision-making. Failure to plan for retirement, lack of participation in the stock market, and poor borrowing behavior can all be linked to ignorance of basic financial concepts. While financial education programs can result in improved saving behavior and financial decision-making, much can be done to improve these programs' effectiveness.
Handle: RePEc:nbr:nberwo:14084
Template-Type: ReDIF-Paper 1.0
Title: Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors
Classification-JEL: G0; G24; G3; M1; M41
Author-Name: Sharon Katz
Note: CF
Number: 14085
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14085
File-URL: http://www.nber.org/papers/w14085.pdf
File-Format: application/pdf
Publication-Status: published as Title: Earnings quality and ownership structure: the role of private equity sponsors Author(s): Katz S P Journal: The Accounting Review, May 2009, Volume: 84 Issue: 3 pp.623-658 (36 pages) Issn: 0001-4826
Abstract: This study explores how firms' ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PE-backed firms). The findings indicate that PE-backed firms generally have higher earnings quality than those that do not have PE sponsorship, engage less in earnings management and report more conservatively both before and after the IPO. Further, PE-backed firms that are majority-owned by PE sponsors exhibit superior long-term stock price performance after they go public. These results stem from the professional ownership, tighter monitoring, and reputational considerations exhibited by PE sponsors.
Handle: RePEc:nbr:nberwo:14085
Template-Type: ReDIF-Paper 1.0
Title: Use of Propensity Scores in Non-Linear Response Models: The Case for Health Care Expenditures
Classification-JEL: C01; C21; I10
Author-Name: Anirban Basu
Author-Person: pba977
Author-Name: Daniel Polsky
Author-Name: Willard G. Manning
Author-Person: pma757
Note: EH TWP
Number: 14086
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14086
File-URL: http://www.nber.org/papers/w14086.pdf
File-Format: application/pdf
Abstract: Under the assumption of no unmeasured confounders, a large literature exists on methods that can be used to estimating average treatment effects (ATE) from observational data and that spans regression models, propensity score adjustments using stratification, weighting or regression and even the combination of both as in doubly-robust estimators. However, comparison of these alternative methods is sparse in the context of data generated via non-linear models where treatment effects are heterogeneous, such as is in the case of healthcare cost data. In this paper, we compare the performance of alternative regression and propensity score-based estimators in estimating average treatment effects on outcomes that are generated via non-linear models. Using simulations, we find that in moderate size samples (n= 5000), balancing on estimated propensity scores balances the covariate means across treatment arms but fails to balance higher-order moments and covariances amongst covariates, raising concern about its use in non-linear outcomes generating mechanisms. We also find that besides inverse-probability weighting (IPW) with propensity scores, no one estimator is consistent under all data generating mechanisms. The IPW estimator is itself prone to inconsistency due to misspecification of the model for estimating propensity scores. Even when it is consistent, the IPW estimator is usually extremely inefficient. Thus care should be taken before naively applying any one estimator to estimate ATE in these data. We develop a recommendation for an algorithm which may help applied researchers to arrive at the optimal estimator. We illustrate the application of this algorithm and also the performance of alternative methods in a cost dataset on breast cancer treatment.
Handle: RePEc:nbr:nberwo:14086
Template-Type: ReDIF-Paper 1.0
Title: A Gap-Filling Theory of Corporate Debt Maturity Choice
Classification-JEL: G32; H63
Author-Name: Robin Greenwood
Author-Name: Samuel Hanson
Author-Person: pha1258
Author-Name: Jeremy C. Stein
Author-Person: pst43
Note: CF
Number: 14087
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14087
File-URL: http://www.nber.org/papers/w14087.pdf
File-Format: application/pdf
Publication-Status: published as Robin Greenwood & Samuel Hanson & Jeremy C. Stein, 2010. "A Gap-Filling Theory of Corporate Debt Maturity Choice," Journal of Finance, American Finance Association, vol. 65(3), pages 993-1028, 06.
Abstract: We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio of government debt to total debt is higher; and ii) by firms with stronger balance sheets. Our theory provides a new perspective on the apparent ability of firms to exploit bond-market return predictability with their financing choices.
Handle: RePEc:nbr:nberwo:14087
Template-Type: ReDIF-Paper 1.0
Title: Capital Market Imperfections and the Theory of Optimum Currency Areas
Classification-JEL: F12; F15; F2; F36
Author-Name: Pierre-Richard Agenor
Author-Person: pag16
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM ITI
Number: 14088
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14088
File-URL: http://www.nber.org/papers/w14088.pdf
File-Format: application/pdf
Publication-Status: published as Agénor, Pierre-Richard & Aizenman, Joshua, 2011. "Capital market imperfections and the theory of optimum currency areas," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1659-1675.
Abstract: This paper studies how capital market imperfections affect the welfare effects of forming a currency union. The analysis considers a bank-only world where intermediaries compete in Cournot fashion and monitoring and state verification are costly. The first part determines the credit market equilibrium and the optimal number of banks, prior to joining the union. The second part discusses the benefits from joining a currency union. A competition effect is identified and related to the added monitoring costs that banks may incur when operating outside their home country, through an argument akin to the Brander-Krugman "reciprocal dumping" model of bilateral trade. Whether joining a union raises welfare of the home country is shown to depend on the relative strength of "investment creation" and "intermediation diversion" effects.
Handle: RePEc:nbr:nberwo:14088
Template-Type: ReDIF-Paper 1.0
Title: What Good Is Wealth Without Health? The Effect of Health on the Marginal Utility of Consumption
Classification-JEL: D12; I1
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: AG EH LS PE
Number: 14089
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14089
File-URL: http://www.nber.org/papers/w14089.pdf
File-Format: application/pdf
Publication-Status: published as Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2013. "What Good Is Wealth Without Health? The Effect Of Health On The Marginal Utility Of Consumption," Journal of the European Economic Association, European Economic Association, vol. 11, pages 221-258, 01.
Abstract: We estimate how the marginal utility of consumption varies with health. To do so, we develop a simple model in which the impact of health on the marginal utility of consumption can be estimated from data on permanent income, health, and utility proxies. We estimate the model using the Health and Retirement Study's panel data on the elderly and near-elderly, and proxy for utility with measures of subjective well-being. We find robust evidence that the marginal utility of consumption declines as health deteriorates. Our central estimate is that a one-standard deviation increase in the number of chronic diseases is associated with an 11 percent decline in the marginal utility of consumption relative to this marginal utility when the individual has no chronic diseases. The 95 percent confidence interval allows us to reject declines in marginal utility of less than 2 percent or more than 17 percent. Point estimates from a wide range of alternative specifications tend to lie within this confidence interval. We present some simple, illustrative calibration results that suggest that state dependence of the magnitude we estimate can have a substantial effect on important economic problems such as the optimal level of health insurance benefits and the optimal level of life-cycle savings.
Handle: RePEc:nbr:nberwo:14089
Template-Type: ReDIF-Paper 1.0
Title: Institutions, Competition, and Capital Market Integration in Japan
Classification-JEL: F15; G21; N15; O16
Author-Name: Kris J. Mitchener
Author-Name: Mari Ohnuki
Note: DAE
Number: 14090
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14090
File-URL: http://www.nber.org/papers/w14090.pdf
File-Format: application/pdf
Publication-Status: published as Mitchener, Kris James & Ohnuki, Mari, 2009. "Institutions, Competition, and Capital Market Integration in Japan," The Journal of Economic History, Cambridge University Press, vol. 69(01), pages 138-171, March.
Abstract: Using a newly-constructed panel data set which includes annual estimates of lending rates for 47 Japanese prefectures, we analyze why interest rates converged over the period 1884-1925. We find evidence that technological innovations and institutional changes played an important role in creating a national capital market in Japan. In particular, the diffusion in the use of the telegraph, the growth in commercial branch banking networks, and the development of Bank of Japan's branches reduced interest-rate differentials. Bank regulation appears to have played little role in impeding financial market integration.
Handle: RePEc:nbr:nberwo:14090
Template-Type: ReDIF-Paper 1.0
Title: Economics and Ideology: Causal Evidence of the Impact of Economic Conditions on Support for Redistribution and Other Ballot Proposals
Classification-JEL: D72; H0
Author-Name: Eric J. Brunner
Author-Name: Stephen L. Ross
Author-Person: pro69
Author-Name: Ebonya L. Washington
Note: POL
Number: 14091
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14091
File-URL: http://www.nber.org/papers/w14091.pdf
File-Format: application/pdf
Publication-Status: published as “Economics and Policy Preferences: Causal Evidence of the Impact of Economic Conditions on Support for Redistribution and Other Proposals,” Review of Economics and Statistics (2011), 93(3): 888-906 (with Eric Brunner and Stephen L. Ross)
Abstract: Using California ballot proposition returns and exogenous shifts to labor demand, we provide the first large-scale causal evidence of the impact of economic conditions on policy preferences. Consistent with economic theory, we find that positive economic shocks decrease support for redistributive policies. More notably, we find evidence of a need for cognitive consistency in voting behavior as economic shocks have a smaller significant impact on voting on non-economic ballot issues. While we also demonstrate that positive shocks decrease turnout, we present evidence that our results reflect changes to the electorate's preferences and not simply to its composition.
Handle: RePEc:nbr:nberwo:14091
Template-Type: ReDIF-Paper 1.0
Title: Optimal Monetary Policy in an Operational Medium-Sized DSGE Model
Classification-JEL: E52; E58; F41
Author-Name: Malin Adolfson
Author-Person: pad42
Author-Name: Stefan Laséen
Author-Person: pla257
Author-Name: Jesper Lindé
Author-Person: pli302
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: EFG IFM ME
Number: 14092
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14092
File-URL: http://www.nber.org/papers/w14092.pdf
File-Format: application/pdf
Publication-Status: published as Malin Adolfson & Stefan Laséen & Jesper Lindé & Lars E.O. Svensson, 2011. "Optimal Monetary Policy in an Operational Medium‐Sized DSGE Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(7), pages 1287-1331, October.
Abstract: We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized DSGE model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports our view that the model parameters may be regarded as unaffected by the monetary policy specification. We discuss how monetary policy, and in particular the choice of output gap measure, affects the transmission of shocks. Finally, we use the model to assess the recent Great Recession in the world economy and how its impact on the economic development in Sweden depends on the conduct of monetary policy. This provides an illustration on how Rames incorporates large international spillover effects.
Handle: RePEc:nbr:nberwo:14092
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Uncertain Life Span
Classification-JEL: I10; J11; J17; O11
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: AG EFG EH
Number: 14093
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14093
File-URL: http://www.nber.org/papers/w14093.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Population Economics in Volume 26, Issue 4 (2013), Page 1485-1522.
Abstract: A considerable amount of uncertainty surrounds life expectancy, the average length of life. The standard deviation in adult life span is about 15 years in the U.S., and theory and evidence suggest it is costly. I calibrate a utility-theoretic model of preferences over length of life and show that one less year in standard deviation is worth about half a mean life year. Differences in the standard deviation exacerbate cross-sectional differences in life expectancy between the U.S. and other industrialized countries, between rich and poor countries, and among poor countries. But accounting for the cost of life-span variance also appears to amplify recently discovered patterns of convergence in world average human well-being. This is partly for methodological reasons and partly because unconditional variance in human length of life, primarily the component due to infant mortality, has exhibited even more convergence than life expectancy. Sustained reductions in the standard deviation of adult life span, which have largely ceased among advanced nations, accounted for about 15 percent of the total economic value of gains against mortality in the U.S. prior to 1950 but only about 5 percent since.
Handle: RePEc:nbr:nberwo:14093
Template-Type: ReDIF-Paper 1.0
Title: Life-cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk
Classification-JEL: D33; G1; G11; G18; H55
Author-Name: Ian Ayres
Author-Person: pay38
Author-Name: Barry J. Nalebuff
Author-Person: pna205
Note: PE
Number: 14094
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14094
Publication-Status: published as Hardcover: 240 pages Publisher: Basic Books (May 4, 2010) Language: English ISBN-10: 0465018297 ISBN-13: 978-0465018291
Abstract: This paper is no longer available on-line from the NBER. A revised version of the paper has been published as "Diversification Across Time" in the Journal of Portfolio Management 39 (Winter 2013), pp.73-86.
Handle: RePEc:nbr:nberwo:14094
Template-Type: ReDIF-Paper 1.0
Title: Is There a Market for Voluntary Health Insurance in Developing Countries?
Classification-JEL: I11
Author-Name: Mark Pauly
Author-Name: Fredric E. Blavin
Author-Name: Sudha Meghan
Note: EH
Number: 14095
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14095
File-URL: http://www.nber.org/papers/w14095.pdf
File-Format: application/pdf
Publication-Status: published as doi: 10.1377/hlthaff.28.6.1778 Health Aff November/December 2009 vol. 28 no. 6 1778-1787
Abstract: In many developing countries the proportion of health care spending paid out of pocket is about half of all spending or more. This study examines the distribution of such spending by income and care type, and the variation in spending about its expected value, in order to see whether voluntary private health insurance that reduces variation in spending might be able to be supplied. Using data from the World Health Survey for 14 developing countries, we find that out of pocket spending varies by income but that most spending usually occurs in income quintiles below the topmost quintile. We use estimates of the variance of total spending, hospital spending, physician spending, and outpatient drug spending about their means to generate estimates of the risk premia risk averse consumers might pay for insurance coverage. For hospital spending and total spending, these risk premia as a percent of expenses are generally larger than reasonable estimates of private health insurer loading as a percent of expenses, suggesting that voluntary insurance might be feasible. However, the strong relationship between spending and income suggests that insurance markets may need to be segmented by income.
Handle: RePEc:nbr:nberwo:14095
Template-Type: ReDIF-Paper 1.0
Title: Utilisation of Physician Services in the 50+ Population. The Relative Importance of Individual versus Institutional Factors in 10 European Countries
Classification-JEL: I11
Author-Name: Kristian Bolin
Author-Name: Anna Lindgren
Author-Name: Bjorn Lindgren
Author-Name: Petter Lundborg
Author-Person: plu193
Note: EH
Number: 14096
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14096
File-URL: http://www.nber.org/papers/w14096.pdf
File-Format: application/pdf
Publication-Status: published as Kristian Bolin & Anna Lindgren & Björn Lindgren & Petter Lundborg, 2009. "Utilisation of physician services in the 50+ population: the relative importance of individual versus institutional factors in 10 European countries," International Journal of Health Care Finance and Economics, vol 9(1), pages 83-112.
Abstract: We analysed the relative importance of individual versus institutional factors in explaining variations in the utilisation of physician services among the 50+ in ten European countries. The importance of the latter was investigated, distinguishing between organisational (explicit) and cultural (implicit) institutional factors, by analysing the influence of supply side factors, such as physician density and physician reimbursement, and demand side factors, such as co-payment and gate-keeping, while controlling for a number of individual characteristics, using cross-national individual-level data from SHARE. Individual differences in health status accounted for about 50 percent of the between-country variation in physician visits, while the organisational and cultural factors considered each account for about 15 percent of the variation. The organisational variables showed the expected signs, with higher physician density being associated with more visits and higher co-payment, gate-keeping, and salary reimbursement being associated with less visits. When analysing specialist visits separately, however, organisational and cultural factors played a greater role, each accounting for about 30 percent of the between-country variation, whereas individual health differences only accounted for 1 percent of the variation.
Handle: RePEc:nbr:nberwo:14096
Template-Type: ReDIF-Paper 1.0
Title: Nature or Nurture? Learning and the Geography of Female Labor Force Participation
Classification-JEL: E2; J16; N32; R1
Author-Name: Alessandra Fogli
Author-Person: pfo48
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: EFG LS
Number: 14097
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14097
File-URL: http://www.nber.org/papers/w14097.pdf
File-Format: application/pdf
Publication-Status: published as Alessandra Fogli & Laura Veldkamp, 2011. "Nature or Nurture? Learning and the Geography of Female Labor Force Participation," Econometrica, Econometric Society, vol. 79(4), pages 1103-1138, 07.
Abstract: One of the most dramatic economic transformations of the past century has been the entry of women into the labor force. While many theories explain why this change took place, we investigate the process of transition itself. We argue that local information transmission generates changes in participation that are geographically heterogeneous, locally correlated and smooth in the aggregate, just like those observed in our data. In our model, women learn about the effects of maternal employment on children by observing nearby employed women. When few women participate in the labor force, data is scarce and participation rises slowly. As information accumulates in some regions, the effects of maternal employment become less uncertain, and more women in that region participate. Learning accelerates, labor force participation rises faster, and regional participation rates diverge. Eventually, information diffuses throughout the economy, beliefs converge to the truth, participation flattens out and regions become more similar again. To investigate the empirical relevance of our theory, we use a new county-level data set to compare our calibrated model to the time-series and geographic patterns of participation.
Handle: RePEc:nbr:nberwo:14097
Template-Type: ReDIF-Paper 1.0
Title: On the Welfare Cost of Inflation and the Recent Behavior of Money Demand
Classification-JEL: E31; E41; E52
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 14098
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14098
File-URL: http://www.nber.org/papers/w14098.pdf
File-Format: application/pdf
Publication-Status: published as Peter N. Ireland, 2009. "On the Welfare Cost of Inflation and the Recent Behavior of Money Demand," American Economic Review, American Economic Association, vol. 99(3), pages 1040-52, June.
Abstract: Post-1980 U.S. data trace out a stable long-run money demand relationship of Cagan's semi-log form between the M1-income ratio and the nominal interest rate, with an interest semi-elasticity below 2. Integrating under this money demand curve yields estimates of the welfare costs of modest departures from Friedman's zero nominal interest rate rule for the optimum quantity of money that are quite small. The results suggest that the Federal Reserve's current policy, which generates low but still positive rates of inflation, provides an adequate approximation in welfare terms to the alternative of moving all the way to the Friedman rule.
Handle: RePEc:nbr:nberwo:14098
Template-Type: ReDIF-Paper 1.0
Title: Price and Real Output Measures for the Education Function of Government: Exploratory Estimates for Primary & Secondary Education
Classification-JEL: O40
Author-Name: Barbara M. Fraumeni
Author-Name: Marshall B. Reinsdorf
Author-Name: Brooks B. Robinson
Author-Name: Matthew P. Williams
Note: ED PR
Number: 14099
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14099
File-URL: http://www.nber.org/papers/w14099.pdf
File-Format: application/pdf
Publication-Status: published as Barbara M. Fraumeni & Marshall B. Reinsdorf & Brooks B. Robinson & Matthew P. Williams, 2009. "Price and Real Output Measures for the Education Function of Government: Exploratory Estimates for Primary and Secondary Education," NBER Chapters, in: Price Index Concepts and Measurement, pages 373-403 National Bureau of Economic Research, Inc.
Abstract: In a previous paper, the authors took the first step in their research on measuring the education function of government by estimating real output measures (Fraumeni, et. al. 2004). In this paper, chain-type Fisher quantity indexes for those output measures are calculated to be more consistent with Bureau of Economic Analysis (BEA) methodology and the real output measures presented in the previous paper are refined. In addition, and more importantly, implicit price deflators are presented to give a more complete picture. Alternative price and real output measures are compared; it is clear that methodology choice matters. Price change is always greater than quantity change for the periods given; however, price changes are overstated to the extent quality changes are not captured in the quantity indexes. Quality-adjustments continue to be the most challenging aspect of decomposing nominal expenditures for government-provided education into price and quantity components.
Handle: RePEc:nbr:nberwo:14099
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rate Regimes and Capital Mobility: How Much of the Swoboda Thesis Survives?
Classification-JEL: F31
Author-Name: Barry Eichengreen
Author-Person: pei2
Note: IFM
Number: 14100
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14100
File-URL: http://www.nber.org/papers/w14100.pdf
File-Format: application/pdf
Abstract: Alexander Swoboda is one of the originators of the bipolar view that capital mobility creates pressure for countries to abandon intermediate exchange rate arrangements in favor of greater flexibility and harder pegs. This paper takes another look at the evidence for this hypothesis using two popular de facto classifications of exchange rate regimes. That evidence supports the bipolar view for the advanced countries, the sample for which it was originally developed, but not obviously for emerging markets and other developing countries. One interpretation of the contrast is that there is a tendency to move away from intermediate regimes in the course of economic and financial development, implying that emerging markets and other developing countries will eventually abandon intermediate regimes as well. Another interpretation is that the advanced countries have been faster to abandon soft pegs because they have been faster to develop attractive alternatives, notably Europe's monetary union. In this view, other countries are unlikely to abandon soft pegs because of the absence of the distinctive political conditions that have made the European alternative feasible. A final interpretation is that the advanced countries have been able to abandon soft peg because of their success in substituting inflation targeting for exchange rate targeting as the anchor for monetary policy. The paper presents some evidence for this view, which suggests the feasibility of further movement by emerging markets and developing countries in the direct of greater exchange rate flexibility.
Handle: RePEc:nbr:nberwo:14100
Template-Type: ReDIF-Paper 1.0
Title: Banking Globalization, Monetary Transmission, and the Lending Channel
Classification-JEL: E5; F3; G20; G3
Author-Name: Nicola Cetorelli
Author-Person: pce70
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Note: IFM ME
Number: 14101
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14101
File-URL: http://www.nber.org/papers/w14101.pdf
File-Format: application/pdf
Abstract: The globalization of banking in the United States is influencing the monetary transmission mechanism both domestically and in foreign markets. Using quarterly information from all U.S. banks filing call reports between 1980 and 2005, we find evidence for the lending channel for monetary policy in large banks, but only those banks that are domestically-oriented and without international operations. We show that the large globally-oriented banks rely on internal capital markets with their foreign affiliates to help smooth domestic liquidity shocks. We also show that the existence of such internal capital markets contributes to an international propagation of domestic liquidity shocks to lending by affiliated banks abroad. While these results imply a substantially more active lending channel than documented in the seminal work of Kashyap and Stein (2000), the lending channel within the United States is declining in strength as banking becomes more globalized.
Handle: RePEc:nbr:nberwo:14101
Template-Type: ReDIF-Paper 1.0
Title: Marijuana Use and High School Dropout: The Influence of Unobservables
Classification-JEL: I10; I18
Author-Name: Daniel F. McCaffrey
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Author-Name: Bing Han
Author-Person: pha1002
Author-Name: Phyllis Ellickson
Note: EH
Number: 14102
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14102
File-URL: http://www.nber.org/papers/w14102.pdf
File-Format: application/pdf
Publication-Status: published as Marijuana Use and High School Dropout The Influence of Unobservables by Daniel F. McCaffrey, Rosalie Liccardo Pacula, Bing Han, Phyllis L. Ellickson Save to My RAND Print Share Cover: Marijuana Use and High School Dropout Published In: Health Economics, v. 19, no. 11, Nov. 2010, p. 1281-1299
Abstract: In this study we reconsider the relationship between heavy and persistent marijuana use and high school dropout status using a unique prospective panel study of over 4500 7th grade students from South Dakota who are followed up through high school. Propensity score weighting is used to adjust for baseline differences that are found to exist before marijuana initiation occurs (7th grade). Weighted logistic regression incorporating these propensity score weights is then used to examine the extent to which time-varying factors, including substance use, also influence the likelihood of dropping out of school. We find a positive association between marijuana use and dropping out (OR=5.68), over half of which can be explained by prior differences in observational characteristics and behaviors. The remaining association (OR=2.31) is made statistically insignificant when measures of cigarette smoking are included in the analysis. Because no physiological justification can be provided for why cigarette smoking would reduce the cognitive effects of marijuana on schooling, we interpret this as evidence that the association is due to other factors. We then use the rich data to explore which constructs are driving this result, determining that it is time-varying parental and peer influences.
Handle: RePEc:nbr:nberwo:14102
Template-Type: ReDIF-Paper 1.0
Title: Protecting Minorities in Binary Elections: A Test of Storable Votes Using Field Data
Classification-JEL: C9; D7; H1
Author-Name: Alessandra Casella
Author-Person: pca496
Author-Name: Shuky Ehrenberg
Author-Name: Andrew Gelman
Author-Name: Jie Shen
Note: POL
Number: 14103
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14103
File-URL: http://www.nber.org/papers/w14103.pdf
File-Format: application/pdf
Publication-Status: published as The B.E. Journal of Economic Analysis & Policy (Advances), Vol. 10: Iss. 1.
Abstract: Democratic systems are built, with good reason, on majoritarian principles, but their legitimacy requires the protection of strongly held minority preferences. The challenge is to do so while treating every voter equally and preserving aggregate welfare. One possible solution is Storable Votes: granting each voter a budget of votes to cast as desired over multiple decisions. During the 2006 student elections at Columbia University, we tested a simple version of this idea: voters were asked to rank the importance of the different contests and to choose where to cast a single extra "bonus vote," had one been available. We used these responses to construct distributions of intensities and electoral outcomes, both without and with the bonus vote. Bootstrapping techniques provided estimates of the probable impact of the bonus vote. The bonus vote performs well: when minority preferences are particularly intense, the minority wins at least one of the contests with 15–30 percent probability; and, when the minority wins, aggregate welfare increases with 85–95 percent probability. When majority and minority preferences are equally intense, the effect of the bonus vote is smaller and more variable but on balance still positive.
Handle: RePEc:nbr:nberwo:14103
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Income on the Weight of Elderly Americans
Classification-JEL: H55; I1; I12; I38; J14; J26
Author-Name: John Cawley
Author-Person: pca6
Author-Name: John R. Moran
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: AG EH LS PE
Number: 14104
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14104
File-URL: http://www.nber.org/papers/w14104.pdf
File-Format: application/pdf
Publication-Status: published as Cawley, John, John Moran, and Kosali Simon. “The Impact of Income on the Weight of Elderly Americans.” Health Economics, 2010, 19(8): 979-993.
Abstract: This paper tests whether income affects the body weight and clinical weight classification of elderly Americans using a natural experiment that led otherwise identical retirees to receive significantly different Social Security payments based on their year of birth. We exploit this natural experiment by estimating models of instrumental variables using data from the National Health Interview Surveys. The model estimates rule out even moderate effects of income on weight and on the probability of being underweight or obese, especially for men.
Handle: RePEc:nbr:nberwo:14104
Template-Type: ReDIF-Paper 1.0
Title: How Changes in Social Security Affect Recent Retirement Trends
Classification-JEL: D31; D91; E21; H55; I3; J08; J14; J26; J32; J38
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas Steinmeier
Note: AG LS PE
Number: 14105
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14105
File-URL: http://www.nber.org/papers/w14105.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Gustman and Thomas L. Steinmeier. "How Changes in Social Security Affect Recent Retirement Trends". Research on Aging. March, 2009. Vol. 31, No. 2: 261-290.
Abstract: According to CPS data, men 65 to 69 were about six percentage points less likely to be retired in 2004 than in 1992. CPS and Health and Retirement Study (HRS) data indicate a corresponding difference of 3 percentage points between 1998 and 2004. Simulations with a structural retirement model suggest changes in Social Security rules between 1992 and 2004 increased full time work of 65 to 67 year old married men by a little under 2 percentage points, about a 9 percent increase, and increased their labor force participation by between 1.4 and 2.2 percentage points, or 2 to 4 percent, depending on age. Social Security changes account for about one sixth of the increase in labor force participation between 1998 and 2004, for married men ages 65 to 67. These rule changes encourage deferring retirement from long term jobs, returning to full time work after retiring, and increasing partial retirement. Although married men in their fifties decrease their participation in the labor force over this period, this is not due to changes in Social Security, but may reflect other factors, including changes in disability.
Handle: RePEc:nbr:nberwo:14105
Template-Type: ReDIF-Paper 1.0
Title: Trade, Firms, and Wages: Theory and Evidence
Classification-JEL: F1; F12; F13; F14
Author-Name: Mary Amiti
Author-Person: pam39
Author-Name: Donald R. Davis
Author-Person: pda33
Note: ITI
Number: 14106
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14106
File-URL: http://www.nber.org/papers/w14106.pdf
File-Format: application/pdf
Publication-Status: published as Mary Amiti & Donald R. Davis, 2012. "Trade, Firms, and Wages: Theory and Evidence," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 1-36.
Abstract: How does trade liberalization affect wages? This is the first paper to consider in theory and data how the impact of final and intermediate input tariff cuts on workers' wages varies with the global engagement of their firm. Our model predicts that a fall in output tariffs lowers wages at import-competing firms, but boosts wages at exporting firms. Similarly, a fall in input tariffs raises wages at import-using firms relative to those at firms that only source locally. Using highly detailed Indonesian manufacturing census data for the period 1991 to 2000, we find considerable support for the model's predictions.
Handle: RePEc:nbr:nberwo:14106
Template-Type: ReDIF-Paper 1.0
Title: Making Property Productive: Reorganizing Rights to Real and Equitable Estates in Britain, 1660 to 1830
Classification-JEL: D02; D61; D63; D86; K0; K11; N0; N43; N93; O12; P48; R12; R14
Author-Name: Dan Bogart
Author-Person: pbo326
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE LE POL
Number: 14107
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14107
File-URL: http://www.nber.org/papers/w14107.pdf
File-Format: application/pdf
Publication-Status: published as Bogart, Dan & Richardson, Gary, 2009. "Making property productive: reorganizing rights to real and equitable estates in Britain, 1660?1830," European Review of Economic History, Cambridge University Press, vol. 13(01), pages 3-30, April.
Abstract: Between 1660 and 1830, Parliament passed thousands of acts restructuring rights to real and equitable estates. These estate acts enabled individuals and families to sell, mortgage, lease, exchange, and improve land previously bound by inheritance rules and other legal legacies. The loosening of these legal constraints facilitated the reallocation of land and resources towards higher-value uses. Data reveals correlations between estate acts, urbanization, and economic development during the decades surrounding the Industrial Revolution.
Handle: RePEc:nbr:nberwo:14107
Template-Type: ReDIF-Paper 1.0
Title: Intangible Capital and Productivity: An Exploration on a Panel of Italian Manufacturing Firms
Classification-JEL: C23; C52; D24
Author-Name: Maria Elena Bontempi
Author-Person: pbo122
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 14108
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14108
File-URL: http://www.nber.org/papers/w14108.pdf
File-Format: application/pdf
Abstract: The paper examines the size and productivity of total intangible capital relative to total tangible capital for a large panel of Italian Manufacturing firms. In the analysis, we decompose total intangibles in two different ways: in intangibles expensed in firms' current accounts (as usually considered in empirical studies) versus intangible capitalized in firms' balance sheets (usually not considered); and in "intellectual capital" (i.e. R&D expenditures, and patenting and related costs) versus "customer capital" (i.e., advertising expenditure, and trademarks and related costs). We systematically assess the robustness of our results by using different specifications of the production functions implying different elasticities of substitution between tangible and intangible capital, and comparing different panel data estimates. Our results underscore that firms' accounting information on intangible investments is genuinely informative, showing that intangible capital and its different components are at least as productive as tangible capital.
Handle: RePEc:nbr:nberwo:14108
Template-Type: ReDIF-Paper 1.0
Title: How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive
Classification-JEL: F1; O1; O53
Author-Name: Robert Koopman
Author-Name: Zhi Wang
Author-Person: pwa898
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 14109
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14109
File-URL: http://www.nber.org/papers/w14109.pdf
File-Format: application/pdf
Abstract: The rise of China in world trade has brought both benefits and anxiety to other economies. For many policy questions, it is crucial to know the extent of domestic value added (DVA) in exports, but the computation is more complicated when processing trade is pervasive. We propose a method for computing domestic and foreign contents that allows for processing trade. By our estimation, the share of domestic content in exports by the PRC was about 50% before China's WTO membership, and has risen to over 60% since then. There are also interesting variations across sectors. Those sectors that are likely labeled as relatively sophisticated such as electronic devices have particularly low domestic content (about 30% or less).
Handle: RePEc:nbr:nberwo:14109
Template-Type: ReDIF-Paper 1.0
Title: Energy Tax Incentives and the Alternative Minimum Tax
Classification-JEL: H20; H23; Q48
Author-Name: Curtis Carlson
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 14110
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14110
File-URL: http://www.nber.org/papers/w14110.pdf
File-Format: application/pdf
Publication-Status: published as Carlson, Curtis & Metcalf, Gilbert E., 2008. "Energy Tax Incentives and the Alternative Minimum Tax," National Tax Journal, National Tax Association, vol. 61(3), pages 477-91, September.
Abstract: We take a first look at limitations on the use of energy-related tax credits contained in the General Business Credit (GBC) due to limitations within the regular corporate income tax as well as the AMT. Between 2000 and 2005, firms were unable to use all energy-related tax credits due to GBC limitations in the regular tax. The AMT has a smaller but still pronounced impact on the ability of firms to use these credits. Finally, we provide some illustrative calculations to demonstrate how the AMT can lead to very different levelized costs of producing electricity from a wind power project.
Handle: RePEc:nbr:nberwo:14110
Template-Type: ReDIF-Paper 1.0
Title: Inexperienced Investors and Bubbles
Classification-JEL: G11
Author-Name: Robin Greenwood
Author-Name: Stefan Nagel
Author-Person: pna176
Note: AP
Number: 14111
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14111
File-URL: http://www.nber.org/papers/w14111.pdf
File-Format: application/pdf
Publication-Status: published as Greenwood, Robin & Nagel, Stefan, 2009. "Inexperienced investors and bubbles," Journal of Financial Economics, Elsevier, vol. 93(2), pages 239-258, August.
Abstract: We use mutual fund manager data from the technology bubble to examine the hypothesis that inexperienced investors play a role in the formation of asset price bubbles. Using age as a proxy for managers' investment experience, we find that around the peak of the technology bubble, mutual funds run by younger managers are more heavily invested in technology stocks, relative to their style benchmarks, than their older colleagues. Furthermore, young managers, but not old managers, exhibit trend-chasing behavior in their technology stock investments. As a result, young managers increase their technology holdings during the run-up, and decrease them during the downturn. Both results are in line with the behavior of inexperienced investors in experimental asset markets. The economic significance of young managers' actions is amplified by large inflows into their funds prior to the peak in technology stock prices.
Handle: RePEc:nbr:nberwo:14111
Template-Type: ReDIF-Paper 1.0
Title: Financially Constrained Fluctuations in an Evolving Network Economy
Classification-JEL: E3
Author-Name: Domenico Delli Gatti
Author-Person: pde349
Author-Name: Mauro Gallegati
Author-Name: Bruce C. Greenwald
Author-Name: Alberto Russo
Author-Name: Joseph E. Stiglitz
Note: EFG
Number: 14112
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14112
File-URL: http://www.nber.org/papers/w14112.pdf
File-Format: application/pdf
Abstract: We explore the properties of a credit network characterized by inside credit - i.e. credit relationships connecting downstream (D) and upstream (U) firms - and outside credit - i.e. credit relationships connecting firms and banks. The structure of the network changes over time due to the preferred-partner choice rule: each agent chooses the partner who charges the lowest price. The net worth of D firms turns out to be the driver of fluctuations. U production, in fact, is determined by demand of intermediate inputs on the part of D firms and production of the latter is financially constrained, i.e. determined by the availability of internal finance proxied by net worth. The output of simulations shows that at the macroeconomic level a business cycle can develop as a consequence of the complex interaction of the agents' financial conditions. We can also reproduce the main stylized facts of firms' demography, i.e. the power law distribution of firms' size and the Laplace distribution of firms' growth rates.
Handle: RePEc:nbr:nberwo:14112
Template-Type: ReDIF-Paper 1.0
Title: Bank Governance, Regulation, and Risk Taking
Classification-JEL: G18; G2; G3
Author-Name: Luc Laeven
Author-Person: pla174
Author-Name: Ross Levine
Author-Person: ple61
Note: CF IFM
Number: 14113
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14113
File-URL: http://www.nber.org/papers/w14113.pdf
File-Format: application/pdf
Publication-Status: published as Laeven, Luc & Levine, Ross, 2009. "Bank governance, regulation and risk taking," Journal of Financial Economics, Elsevier, vol. 93(2), pages 259-275, August.
Abstract: This paper conducts the first empirical assessment of theories concerning relationships among risk taking by banks, their ownership structures, and national bank regulations. We focus on conflicts between bank managers and owners over risk, and show that bank risk taking varies positively with the comparative power of shareholders within the corporate governance structure of each bank. Moreover, we show that the relation between bank risk and capital regulations, deposit insurance policies, and restrictions on bank activities depends critically on each bank's ownership structure, such that the actual sign of the marginal effect of regulation on risk varies with ownership concentration. These findings have important policy implications as they imply that the same regulation will have different effects on bank risk taking depending on the bank's corporate governance structure.
Handle: RePEc:nbr:nberwo:14113
Template-Type: ReDIF-Paper 1.0
Title: Will the Stork Return to Europe and Japan? Understanding Fertility Within Developed Nations
Classification-JEL: I0; J13; J16
Author-Name: Bruce Sacerdote
Author-Name: James Feyrer
Author-Person: pfe139
Note: CH EFG LS
Number: 14114
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14114
File-URL: http://www.nber.org/papers/w14114.pdf
File-Format: application/pdf
Publication-Status: published as James Feyrer & Bruce Sacerdote & Ariel Dora Stern, 2008. "Will the Stork Return to Europe and Japan? Understanding Fertility within Developed Nations," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 3-22, Summer.
Abstract: Only a few rich nations are currently at replacement levels of fertility and many are considerably below. We believe that changes in the status of women are driving fertility change. At low levels of female status, women specialize in household production and fertility is high. In an intermediate phase, women have increasing opportunities to earn a living outside the home yet still shoulder the bulk of household production. Fertility is at a minimum in this regime due to the increased opportunity cost in women's foregone wages with no decrease in time allocated to childcare. We see the lowest fertility nations (Japan, Spain, Italy) as being in this regime. At even higher levels of women's status, men begin to share in the burden of child care at home and fertility is higher than in the middle regime. This progression has been observed in the US, Sweden and other countries. Using ISSP and World Values Survey data we show that countries in which men perform relatively more of the childcare and household production (and where female labor force participation was highest 30 years ago) have the highest fertility within the rich country sample. Fertility and women's labor force participation have become positively correlated across high income countries. The trend in men's household work suggests that the low fertility countries may see increases in fertility as women's household status catches up to their workforce opportunities. We also note that as the poor nations of the world undergo the demographic transition they appear to be reducing fertility faster and further than the current rich countries did at similar levels of income. By examining fertility differences between the rich nations we may be able to gain insight into where the world is headed.
Handle: RePEc:nbr:nberwo:14114
Template-Type: ReDIF-Paper 1.0
Title: Naked Exclusion: An Experimental Study of Contracts with Externalities
Classification-JEL: C72; C90; K21; K41; L12; L40
Author-Name: Claudia M. Landeo
Author-Person: pla167
Author-Name: Kathryn E. Spier
Note: LE
Number: 14115
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14115
File-URL: http://www.nber.org/papers/w14115.pdf
File-Format: application/pdf
Publication-Status: published as Claudia M. Landeo & Kathryn E. Spier, 2009. "Naked Exclusion: An Experimental Study of Contracts with Externalities," American Economic Review, American Economic Association, vol. 99(5), pages 1850-77, December.
Abstract: This paper reports the results of an experiment designed to assess the ability of an incumbent seller to profitably foreclose a market with exclusive contracts. We use the strategic environment described by Rasmusen, Ramseyer, and Wiley (1991) and Segal and Whinston (2000) where entry is unprofitable when sufficiently many downstream buyers sign exclusive contracts with the incumbent. When discrimination is impossible, the game resembles a stag-hunt (coordination) game in which the buyers' payoffs are endogenously chosen by the incumbent seller. Exclusion occurs when the buyers fail to coordinate on their preferred equilibrium. Two-way non-binding pre-play communication among the buyers lowers the power of exclusive contracts and induces more generous contract terms from the seller. When discrimination and communication are possible, the exclusion rate rises. Divide-and-conquer strategies are observed more frequently when buyers can communicate with each other. Exclusion rates are significantly higher when the buyers' payoffs are endogenously chosen rather than exogenously given. Finally, secret offers are shown to decrease the incumbent's power to profitably exclude.
Handle: RePEc:nbr:nberwo:14115
Template-Type: ReDIF-Paper 1.0
Title: Credit Rationing, Risk Aversion and Industrial Evolution in Developing Countries
Classification-JEL: D24; L26; O16
Author-Name: Eric Bond
Author-Person: pbo305
Author-Name: James R. Tybout
Author-Name: Hâle Utar
Author-Person: put4
Note: PR
Number: 14116
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14116
File-URL: http://www.nber.org/papers/w14116.pdf
File-Format: application/pdf
Publication-Status: published as Eric W. Bond & James Tybout & Hale Utar, 2015. "Credit Rationing, Risk Aversion, And Industrial Evolution In Developing Countries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 695-722, 08.
Abstract: Relative to their counterparts in high-income regions, entrepreneurs in developing countries face less efficient financial markets, more volatile macroeconomic conditions, and higher entry costs. This paper develops a dynamic empirical model that links these features of the business environment to cross-firm productivity distributions, entrepreneurs' welfare, and patterns of industrial evolution. Applied to panel data on Colombian apparel producers, the model yields econometric estimates of a credit market imperfection index, the sunk costs of creating a new business, and a risk aversion index (inter alia). Model-based counterfactual experiments suggest that improved intermediation could dramatically increase the return on assets for entrepreneurial households with modest wealth, and that the gains are particularly large when the macro environment is relatively volatile.
Handle: RePEc:nbr:nberwo:14116
Template-Type: ReDIF-Paper 1.0
Title: Theory and Empirical Work on Imperfectly Competitive Markets
Classification-JEL: C01; C5; C73; L0; L1; L4
Author-Name: Ariel Pakes
Author-Person: ppa20
Note: IO PR
Number: 14117
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14117
File-URL: http://www.nber.org/papers/w14117.pdf
File-Format: application/pdf
Abstract: This paper reviews recent methodological developments in the empirical analysis of imperfectly competitive markets highlighting outstanding problems. Some of these problems are econometric; e.g. the need for a deeper understanding of the small sample properties of our estimators. Most of the other problems relate to issues which have been a central part of ongoing research programs in economic theory for some time. We consider ways in which applied work can cope with these problems and, in so doing, also inform theory. The use of estimators based on moment inequalities opens up several possibilities in this regard and a detailed discussion of the assumptions used to rationalize these estimators is provided. An example, the analysis of contracts in buyer-seller networks, is used to highlight these points.
Handle: RePEc:nbr:nberwo:14117
Template-Type: ReDIF-Paper 1.0
Title: Minimum Drinking Age Laws and Infant Health Outcomes
Classification-JEL: I18; J13
Author-Name: Tara Watson
Author-Name: Angela Fertig
Note: CH EH PE
Number: 14118
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14118
File-URL: http://www.nber.org/papers/w14118.pdf
File-Format: application/pdf
Publication-Status: published as Fertig, Angela R. & Watson, Tara, 2009. "Minimum drinking age laws and infant health outcomes," Journal of Health Economics, Elsevier, vol. 28(3), pages 737-747, May.
Abstract: Alcohol policies have potentially far-reaching impacts on risky sexual behavior, prenatal health behaviors, and subsequent outcomes for infants. We examine whether changes in minimum drinking age (MLDA) laws affect the likelihood of poor birth outcomes. Using data from the National Vital Statistics (NVS) for the years 1978-88, we find that a drinking age of 18 is associated with adverse outcomes among births to young mothers -- including higher incidences of low birth weight and premature birth, but not congenital malformations. The effects are largest among black women. We find suggestive evidence from both the NVS and the 1979 National Longitudinal Study of Youth (NLSY) that the MLDA laws alter the composition of births that occur. In states with lenient drinking laws, young black mothers are more likely to have used alcohol 12 months prior to the birth of their child and less likely to report paternal information on the birth certificate. We suspect that lenient drinking laws generate poor birth outcomes because they increase the number of unplanned pregnancies.
Handle: RePEc:nbr:nberwo:14118
Template-Type: ReDIF-Paper 1.0
Title: Crashes and Recoveries in Illiquid Markets
Classification-JEL: C78; D83; E44; G1
Author-Name: Ricardo Lagos
Author-Person: pla18
Author-Name: Guillaume Rocheteau
Author-Person: pro264
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP
Number: 14119
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14119
File-URL: http://www.nber.org/papers/w14119.pdf
File-Format: application/pdf
Abstract: We study the dynamics of liquidity provision by dealers during an asset market crash, described as a temporary negative shock to investors aggregate asset demand. We consider a class of dynamic market settings where dealers can trade continuously with each other, while trading between dealers and investors is subject to delays and involves bargaining. We derive conditions on fundamentals, such as preferences, market structure and the characteristics of the market crash (e.g., severity, persistence) under which dealers provide liquidity to investors following the crash. We also characterize the conditions under which dealers incentives to provide liquidity are consistent with market efficiency.
Handle: RePEc:nbr:nberwo:14119
Template-Type: ReDIF-Paper 1.0
Title: Intensified Regulatory Scrutiny and Bank Distress in New York City During the Great Depression
Classification-JEL: E42; G21; N1; N12
Author-Name: Gary Richardson
Author-Person: pri185
Author-Name: Patrick Van Horn
Author-Person: pva512
Note: DAE
Number: 14120
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14120
File-URL: http://www.nber.org/papers/w14120.pdf
File-Format: application/pdf
Publication-Status: published as Richardson, Gary & Van Horn, Patrick, 2009. "Intensified Regulatory Scrutiny and Bank Distress in New York City During the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 69(02), pages 446-465, June.
Abstract: New data reveals that bank distress peaked in New York City, at the center of the United States money market, in July and August 1931, when the banking crisis peaked in Germany and before Britain abandoned the gold standard. This paper tests competing theories about the causes of New York's banking crisis. The cause appears to have been intensified regulatory scrutiny, which was a delayed reaction to the failure of the Bank of United States, rather than the exposure of money-center banks to events overseas.
Handle: RePEc:nbr:nberwo:14120
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Location of Production in a World of Intangible Productive Assets, FDI, and Intrafirm Trade
Classification-JEL: D2; F23; H25
Author-Name: Robert E. Lipsey
Author-Person: pli259
Note: IFM ITI PR
Number: 14121
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14121
File-URL: http://www.nber.org/papers/w14121.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Lipsey, 2010. "Measuring The Location Of Production In A World Of Intangible Productive Assets, Fdi, And Intrafirm Trade," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages S99-S110, 06.
Abstract: As production comes to depend more on intangible productive assets, the location of production by multinational firms becomes increasingly ambiguous. The reason is that, within the firm, these assets have no clear geographical location, but only a nominal location determined by the firm's tax or legal strategies.
The effects of these location ambiguities, and the resulting distortions for tax reasons of the location of production, are described and it is estimated that for U.S. firms' affiliates in a few tax havens alone, the exaggeration of value added in those locations amounted, in 2005, to about 4 percent of worldwide affiliate sales, and the exaggeration of sales to about 10 percent of worldwide affiliate sales. Some possibilities for estimating the location of production that could supersede the present dependence on accounting measures distorted by tax-saving policies are described.
Handle: RePEc:nbr:nberwo:14121
Template-Type: ReDIF-Paper 1.0
Title: Wages, Unemployment and Inequality with Heterogeneous Firms and Workers
Classification-JEL: D21; D24; D31; D43; J31; J64
Author-Name: Elhanan Helpman
Author-Person: phe205
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Stephen Redding
Author-Person: pre64
Note: EFG LS
Number: 14122
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14122
File-URL: http://www.nber.org/papers/w14122.pdf
File-Format: application/pdf
Abstract: In this paper we develop a multi-sector general equilibrium model of firm heterogeneity, worker heterogeneity and labor market frictions. We characterize the distributions of employment, unemployment, wages and income within and between sectors as a function of structural parameters. We find that greater firm heterogeneity increases unemployment, wage inequality and income inequality, whereas greater worker heterogeneity has ambiguous effects. We also find that labor market frictions have non-monotonic effects on aggregate unemployment and inequality through within- and between-sector components. Finally, high-ability workers have the lowest unemployment rates but the greatest wage inequality, and income inequality is lowest for intermediate ability. Although these results are interesting in their own right, the main contribution of the paper is in providing a framework for analyzing these types of issues.
Handle: RePEc:nbr:nberwo:14122
Template-Type: ReDIF-Paper 1.0
Title: Direct Democracy and Local Public Goods: Evidence from a Field Experiment in Indonesia
Classification-JEL: D72
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: PE POL
Number: 14123
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14123
File-URL: http://www.nber.org/papers/w14123.pdf
File-Format: application/pdf
Publication-Status: published as Direct Democracy and Local Public Goods: Evidence from a Field Experiment in Indonesia American Political Science Review 104 (2), pp. 243-267, May 2010.
Abstract: This paper presents an experiment where 48 Indonesian villages were randomly assigned to choose development projects through either representative-based meetings or direct election-based plebiscites. Plebiscites resulted in dramatically higher satisfaction among villagers, increased knowledge about the project, greater perceived benefits, and higher reported willingness to contribute. Changing the political mechanism had much smaller effects on the actual projects selected, with some evidence that plebiscites resulted in projects chosen by women being located in poorer areas. The results show that direct participation in political decision making can substantially increase satisfaction and legitimacy, even when it has little effect on actual decisions.
Handle: RePEc:nbr:nberwo:14123
Template-Type: ReDIF-Paper 1.0
Title: The Lengthening of Childhood
Classification-JEL: I2; I21; I28
Author-Name: David Deming
Author-Person: pde497
Author-Name: Susan Dynarski
Author-Person: pdy1
Note: CH ED
Number: 14124
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14124
File-URL: http://www.nber.org/papers/w14124.pdf
File-Format: application/pdf
Publication-Status: published as David Deming & Susan Dynarski, 2008. "The Lengthening of Childhood," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 71-92, Summer.
Abstract: Forty years ago, 96% of six-year-old children were enrolled in first grade or above. As of 2005, the figure was just 84%. The school attendance rate of six-year-olds has not decreased; rather, they are increasingly likely to be enrolled in kindergarten rather than first grade. This paper documents this historical shift. We show that only about a quarter of the change can be proximately explained by changes in school entry laws; the rest reflects "academic redshirting," the practice of enrolling a child in a grade lower than the one for which he is eligible. We show that the decreased grade attainment of six-year-olds reverberates well beyond the kindergarten classroom. Recent stagnation in the high school and college completion rates of young people is partly explained by their later start in primary school. The relatively late start of boys in primary school explains a small but significant portion of the rising gender gaps in high school graduation and college completion. Increases in the age of legal school entry intensify socioeconomic differences in educational attainment, since lower-income children are at greater risk of dropping out of school when they reach the legal age of school exit.
Handle: RePEc:nbr:nberwo:14124
Template-Type: ReDIF-Paper 1.0
Title: State and Federal Approaches to Health Reform: What Works for the Working Poor?
Classification-JEL: I1; I11; J3
Author-Name: Ellen Meara
Author-Name: Meredith Rosenthal
Author-Name: Anna Sinaiko
Author-Name: Katherine Baicker
Note: EH PE
Number: 14125
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14125
File-URL: http://www.nber.org/papers/w14125.pdf
File-Format: application/pdf
Publication-Status: published as Ellen Meara & Meredith B. Rosenthal & Anna D. Sinaiko & Katherine Baicker, 2008. "State and Federal Approaches to Health Reform: What Works for the Working Poor?," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 10(1).
Publication-Status: published as State and Federal Approaches to Health Reform: What Works for the Working Poor?, Ellen Meara, Meredith B. Rosenthal, Anna D. Sinaiko, Katherine Baicker. in Frontiers in Health Policy Research, Volume 10, Cutler, Garber, and Goldman. 2007
Abstract: We compare and contrast the labor market and distributional impact of three common approaches to state and federal health insurance expansion: public insurance expansions, refundable tax credits for low income people, and employer and individual mandates. We draw on existing estimates from the literature and individual-level data on the non-institutionalized population aged 64 and younger from the 2005 Current Population Survey to estimate how each approach affects (1) the number of people insured; (2) private and public health spending; (3) employment and wages; and (4) the distribution of subsidies across families based on income in relation to the federal poverty level and work status of adult family members. Employer mandates expand coverage to the largest number of previously insured relative to public insurance expansions and individual tax credits, but with potentially negative labor market consequences. Medicaid expansions could achieve moderate reductions in the share of the uninsured with neutral labor market consequences, and by definition, they expand coverage to the poorest groups regardless of work status. Tax credits extend coverage to relatively few uninsured, but with neutral effects on the labor market. Both Medicaid expansions and tax credits offer moderate redistribution to previously insured individuals who are poor or near-poor. None of the three policies significantly expand insurance coverage among poor working families. Our findings suggest that no single approach helps the working poor in exactly the ways policy makers might hope. To the extent that states are motivated to help the uninsured in poor working families, health reforms must find ways to include those unlikely to take up optional policies, and states must address the challenge of the many uninsured likely to be excluded from policies based on part-time work status, firm size, or immigration status.
Handle: RePEc:nbr:nberwo:14125
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rate Regimes and the Extensive Margin of Trade
Classification-JEL: F4
Author-Name: Paul R. Bergin
Author-Person: pbe249
Author-Name: Ching-Yi Lin
Author-Person: pli707
Note: IFM
Number: 14126
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14126
File-URL: http://www.nber.org/papers/w14126.pdf
File-Format: application/pdf
Publication-Status: published as Exchange Rate Regimes and the Extensive Margin of Trade, Paul R. Bergin, Ching-Yi Lin. in NBER International Seminar on Macroeconomics 2008, Frankel and Pissarides. 2009
Abstract: This paper finds that currency unions and direct exchange rate pegs raise trade through distinct channels. Panel data analysis of the period 1973-2000 indicates that currency unions have raised trade predominantly at the extensive margin, the entry of new firms or products. In contrast, direct pegs have worked almost entirely at the intensive margin, increased trade of existing products. A stochastic general equilibrium model is developed to understand this result, featuring price stickiness and firm entry under uncertainty. Because both regimes tend to reliably provide exchange rate stability over the horizon of a year or so, which is the horizon of price setting, they both lead to lower export prices and greater demand for exports. But because currency unions historically are more durable over a longer horizon than pegs, they encourage firms to make the longer-term investment needed to enter a new market. The model predicts that when exchange rate uncertainty is completely and permanently eliminated, all of the adjustment in trade should occur at the extensive margin.
Handle: RePEc:nbr:nberwo:14126
Template-Type: ReDIF-Paper 1.0
Title: Multi-product Firms and Product Turnover in the Developing World: Evidence from India
Classification-JEL: F13; F14; L1; L6
Author-Name: Pinelopi K. Goldberg
Author-Person: pgo1
Author-Name: Amit Khandelwal
Author-Person: pkh138
Author-Name: Nina Pavcnik
Author-Person: ppa511
Author-Name: Petia Topalova
Note: ITI
Number: 14127
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14127
File-URL: http://www.nber.org/papers/w14127.pdf
File-Format: application/pdf
Publication-Status: published as Pinelopi K Goldberg & Amit K Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Multiproduct Firms and Product Turnover in the Developing World: Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 1042-1049, 02.
Abstract: Recent theoretical work predicts that an important margin of adjustment to deregulation or trade reforms is the reallocation of output within firms through changes in their product mix. Empirical work has accordingly shifted its focus towards multi-product firms and their product mix decisions. Existing studies have however focused exclusively on the U.S. Using detailed firm-level data from India, we provide the first evidence on the patterns of multi-product firm production in a large developing country during a period (1989-2003) that spans large-scale trade and other market reforms. We find that in the cross-section, multi-product firms in India look remarkably similar to their U.S. counterparts, confirming the predictions of recent theoretical models. The time-series patterns however exhibit important differences. In contrast to evidence from the U.S., product churning--particularly product rationalization -- is far less common in India. We thus find little evidence of "creative destruction". We also find no link between declines in tariffs on final goods induced by India's 1991 trade reform and product dropping. The lack of product dropping is consistent with the role of industrial regulation in India, which, like in many other developing countries, may prevent an efficient allocation of resources.
Handle: RePEc:nbr:nberwo:14127
Template-Type: ReDIF-Paper 1.0
Title: Age, Luck, and Inheritance
Classification-JEL: E21; E25
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Shenghao Zhu
Author-Person: pzh435
Note: EFG
Number: 14128
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14128
File-URL: http://www.nber.org/papers/w14128.pdf
File-Format: application/pdf
Abstract: We present a mechanism to analytically generate a double Pareto distribution of wealth in a continuous time OLG model with optimizing agents who have bequest motives, are subject to stochastic returns on capital and have uncertain lifespans. We disentangle, roughly, the contribution of inheritance, age and stochastic rates of capital return to wealth inequality, in particular to the Gini coefficient. We investigate the role of the fiscal and redistributive policies for wealth inequality and social welfare.
Handle: RePEc:nbr:nberwo:14128
Template-Type: ReDIF-Paper 1.0
Title: Foreign Influence and Welfare
Classification-JEL: D72; D74; F11; F13; F51; F59; H23; P16
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Gerard Padró i Miquel
Note: ITI POL
Number: 14129
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14129
File-URL: http://www.nber.org/papers/w14129.pdf
File-Format: application/pdf
Publication-Status: published as Antràs, Pol & Padró i Miquel, Gerard, 2011. "Foreign influence and welfare," Journal of International Economics, Elsevier, vol. 84(2), pages 135-148, July.
Abstract: How do foreign interests influence the policy determination process? What are the welfare implications of such foreign influence? In this paper we develop a model of foreign influence and apply it to the study of optimal tariffs. We develop a two-country voting model of electoral competition, where we allow the incumbent party in each country to take costly actions that probabilistically affect the electoral outcome in the other country. We show that policies end up maximizing a weighted sum of domestic and foreign welfare, and we study the determinants of this weight. We show that foreign influence may be welfare-enhancing from the point of view of aggregate world welfare because it helps alleviate externalities arising from cross-border effects of policies. Foreign influence can however prove harmful in the presence of large imbalances in influence power across countries. We apply our model of foreign influence to the study of optimal trade policy. We derive a modified formula for the optimal import tariff and show that a country's import tariff is more distorted whenever the influenced country is small relative to the influencing country and whenever natural trade barriers between the two countries are small.
Handle: RePEc:nbr:nberwo:14129
Template-Type: ReDIF-Paper 1.0
Title: The Colonial Origins of Comparative Development: An Investigation of the Settler Mortality Data
Classification-JEL: I12; N10; O11; O57; P16; P51
Author-Name: David Y. Albouy
Author-Person: pal128
Note: EFG POL
Number: 14130
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14130
File-URL: http://www.nber.org/papers/w14130.pdf
File-Format: application/pdf
Publication-Status: published as Albouy, David. 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Comment." American Economic Review, 102(6), 3059-76. October
Abstract: In a seminal contribution, Acemoglu, Johnson, and Robinson (2001) argue property-rights institutions powerfully affect national income, using estimated mortality rates of early European settlers to instrument capital expropriation risk. However 36 of the 64 countries in their sample are assigned mortality rates from other countries, typically based on mistaken or conflicting evidence. Also, incomparable mortality rates from populations of laborers, bishops, and soldiers - often on campaign - are combined in a manner favoring their hypothesis. When these data issues are controlled for, the relationship between mortality and expropriation risk lacks robustness, and instrumental-variable estimates become unreliable, often with infinite confidence intervals.
Handle: RePEc:nbr:nberwo:14130
Template-Type: ReDIF-Paper 1.0
Title: Vengeance
Classification-JEL: H56; I0; K4; K42; O1; P16
Author-Name: Naci H. Mocan
Author-Person: pmo270
Note: CH EH
Number: 14131
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14131
File-URL: http://www.nber.org/papers/w14131.pdf
File-Format: application/pdf
Publication-Status: published as “Vengeance. ” The Review of Economics and Statistics, July 2013. Vol 95:3; pp. 969-82.
Abstract: This paper investigates the extent of vengeful feelings and their determinants using data on more than 89,000 individuals from 53 countries. Country characteristics (such as per-capita income, average education of the country, presence of an armed conflict, the extent of the rule-of-law, uninterrupted democracy, individualism) as well as personal attributes of the individuals influence vengeful feelings. The magnitude of vengeful feelings is greater for people in low-income countries, in countries with low levels of education, low levels of the rule-of-law, in collectivist countries and in countries that experienced an armed conflict in recent history. Females, older people, working people, people who live in high-crime areas of their country and people who are at the bottom 50% of their country's income distribution are more vengeful. The intensity of vengeful feelings dies off gradually over time. The findings suggest that vengeful feelings of people are subdued as a country develops economically and becomes more stable politically and socially and that both country characteristics and personal attributes are important determinants of vengeance. Poor people who live in higher-income societies that are ethno-linguistically homogeneous are as vengeful as rich people who live in low-income societies that are ethno-linguistically fragmented. These results reinforce the idea that some puzzles about individual choice can best be explained by considering the interplay of personal and cultural factors.
Handle: RePEc:nbr:nberwo:14131
Template-Type: ReDIF-Paper 1.0
Title: Climate Change and Economic Growth: Evidence from the Last Half Century
Classification-JEL: O11; O13; O40; Q54
Author-Name: Melissa Dell
Author-Name: Benjamin F. Jones
Author-Person: pjo400
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: EEE EFG
Number: 14132
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14132
File-URL: http://www.nber.org/papers/w14132.pdf
File-Format: application/pdf
Publication-Status: published as Dell M, Jones B, Olken B. Temperature Shocks and Economic Growth: Evidence from the Last Half Century. American Economic Journal: Macroeconomics. 2012;4(3):66-95.
Abstract: This paper uses annual variation in temperature and precipitation over the past 50 years to examine the impact of climatic changes on economic activity throughout the world. We find three primary results. First, higher temperatures substantially reduce economic growth in poor countries but have little effect in rich countries. Second, higher temperatures appear to reduce growth rates in poor countries, rather than just the level of output. Third, higher temperatures have wide-ranging effects in poor nations, reducing agricultural output, industrial output, and aggregate investment, and increasing political instability. Analysis of decade or longer climate shifts also shows substantial negative effects on growth in poor countries. Should future impacts of climate change mirror these historical effects, the negative impact on poor countries may be substantial.
Handle: RePEc:nbr:nberwo:14132
Template-Type: ReDIF-Paper 1.0
Title: Ideas and Growth
Classification-JEL: O1
Author-Name: Robert E. Lucas, Jr.
Note: EFG
Number: 14133
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14133
File-URL: http://www.nber.org/papers/w14133.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Lucas, 2009. "Ideas and Growth," Economica, London School of Economics and Political Science, vol. 76(301), pages 1-19, 02.
Abstract: What is it about modern capitalist economies that allows them, in contrast to all earlier societies, to generate sustained growth in productivity and living standards? It is widely agreed that the productivity growth of the industrialized economies is mainly an ongoing intellectual achievement, a sustained flow of new ideas. Are these ideas the achievements of a few geniuses, Newton, Beethoven, and a handful of others, viewed as external to the activities of ordinary people? Are they the product of a specialized research sector, engaged in the invention of patent-protected processes over which they have monopoly rights? Both images are based on important features of reality and both have inspired interesting growth theories, but neither seems to me central. What is central, I believe, is that fact that the industrial revolution involved the emergence (or rapid expansion) of a class of educated people, thousands-now many millions-of people who spend entire careers exchanging ideas, solving work-related problems, generating new knowledge.
Handle: RePEc:nbr:nberwo:14133
Template-Type: ReDIF-Paper 1.0
Title: Crisis and Responses: the Federal Reserve and the Financial Crisis of 2007-2008
Classification-JEL: E5
Author-Name: Stephen G. Cecchetti
Author-Person: pce4
Note: ME
Number: 14134
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14134
File-URL: http://www.nber.org/papers/w14134.pdf
File-Format: application/pdf
Publication-Status: published as Stephen G. Cecchetti, 2009. "Crisis and Responses: The Federal Reserve in the Early Stages of the Financial Crisis," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 51-75, Winter.
Abstract: Realizing that their traditional instruments were inadequate for responding to the crisis that began on 9 August 2007, Federal Reserve officials improvised. Beginning in mid-December 2007, they implemented a series of changes directed at ensuring that liquidity would be distributed to those institutions that needed it most. Conceptually, this meant America's central bankers shifted from focusing solely on the size of their balance sheet, which they use to keep the overnight interbank lending rate close to their chosen target, to manipulating the composition of their assets as well. In this paper, I examine the Federal Reserve's conventional and unconventional responses to the financial crisis of 2007-2008.
Handle: RePEc:nbr:nberwo:14134
Template-Type: ReDIF-Paper 1.0
Title: Models of Idea Flows
Classification-JEL: O1
Author-Name: Fernando E. Alvarez
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Robert E. Lucas, Jr.
Note: EFG
Number: 14135
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14135
File-URL: http://www.nber.org/papers/w14135.pdf
File-Format: application/pdf
Abstract: This paper introduces several variations of the Eaton and Kortum (1999) model of technological change and characterizes their long run implications. Both exogenous and endogenous growth examples are studied.
Handle: RePEc:nbr:nberwo:14135
Template-Type: ReDIF-Paper 1.0
Title: Exclusionary Policies in Urban Development, How under-servicing of migrant households affects the growth and composition of Brazilian cities
Classification-JEL: D7; H7; J6; O15; O54; R5
Author-Name: Leo Feler
Author-Name: J. Vernon Henderson
Author-Person: phe30
Note: PE
Number: 14136
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14136
File-URL: http://www.nber.org/papers/w14136.pdf
File-Format: application/pdf
Publication-Status: published as “Exclusionary Policies in Urban Development,” with Leo Feler Journal of Urban Economics, 2011, 69, 253-272
Abstract: Localities in developed countries often restrict construction and population growth through regulations governing land usage, lot sizes, building heights, and frontage requirements. In developing countries, such policies are less effective because of the existence of unregulated, informal housing markets. Cities in developing countries that seek to limit in-migration must also discourage entry into informal housing by providing low levels of public services to this sector. In this paper, we analyze the causes of slums, using data from Brazilian urban areas. We develop a model of the decisions that localities make to affect in-migration and find evidence that localities act strategically. Richer and larger localities in an urban area reduce provision of water and sewerage connections to the smaller houses in which poorer migrants would live to discourage the in-migration of these poorer migrants and deflect them to other localities. We also find that under-servicing smaller houses reduces the population growth rate of localities. Not only does it reduce the in-migration of low-educated households, it seems that, because of negative externalities, such under-servicing also reduces the growth rate of higher-educated households.
Handle: RePEc:nbr:nberwo:14136
Template-Type: ReDIF-Paper 1.0
Title: Adjusted Estimates of Worker Flows and Job Openings in JOLTS
Classification-JEL: C82; J63
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: R. Jason Faberman
Author-Person: pfa260
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Ian Rucker
Note: EFG LS
Number: 14137
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14137
File-URL: http://www.nber.org/papers/w14137.pdf
File-Format: application/pdf
Publication-Status: published as Adjusted Estimates of Worker Flows and Job Openings in JOLTS, Steven J. Davis, R. Jason Faberman, John C. Haltiwanger, Ian Rucker. in Labor in the New Economy, Abraham, Spletzer, and Harper. 2010
Abstract: We develop and implement a method to improve estimates of worker flows and job openings based on the Job Openings and Labor Turnover Survey (JOLTS). Our method involves reweighting the cross-sectional density of employment growth rates in JOLTS to match the corresponding density in the comprehensive Business Employment Dynamics (BED) data. To motivate our work, we compare JOLTS to other data sources and document large discrepancies with respect to aggregate employment growth, the magnitude of worker flows, and the cross-sectional density of establishment growth rates. We also discuss issues related to JOLTS sample design and nonresponse corrections. Our adjusted statistics for hires and separations exceed the published statistics by about one-third. The adjusted layoff rate is more than 60 percent greater than the published layoff rate. Time-series properties are also affected. For example, hires exhibit more volatility than separations in the published statistics, but the reverse holds in the adjusted statistics. The impact of our adjustment methodology on estimated job openings is more modest, raising the vacancy rate by about 8 percent.
Handle: RePEc:nbr:nberwo:14137
Template-Type: ReDIF-Paper 1.0
Title: The Knowledge Trap: Human Capital and Development Reconsidered
Classification-JEL: F22; F23; I20; J24; J31; O11; O15
Author-Name: Benjamin F. Jones
Author-Person: pjo400
Note: ED EFG PR
Number: 14138
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14138
File-URL: http://www.nber.org/papers/w14138.pdf
File-Format: application/pdf
Abstract: This paper presents a model where human capital differences - rather than technology differences - can explain several central phenomena in the world economy. The results follow from the educational choices of workers, who decide not just how long to train, but also how broadly. A "knowledge trap" occurs in economies where skilled workers favor broad but shallow knowledge. This simple idea can inform cross-country income differences, international trade patterns, poverty traps, and price and wage differences across countries in a manner broadly consistent with existing empirical evidence. The model also provides insights about the brain drain, migration, and the role for multinationals in development. More generally, this paper shows that standard human capital accounting methods can severely underestimate the role of education in development. It shows how endogenous educational decisions can replace exogenous technology differences in a range of economic reasoning.
Handle: RePEc:nbr:nberwo:14138
Template-Type: ReDIF-Paper 1.0
Title: Global Trade and the Maritime Transport Revolution
Classification-JEL: F15; F40; N70
Author-Name: David S. Jacks
Author-Person: pja138
Author-Name: Krishna Pendakur
Author-Person: ppe241
Note: DAE ITI
Number: 14139
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14139
File-URL: http://www.nber.org/papers/w14139.pdf
File-Format: application/pdf
Publication-Status: published as David S Jacks & Krishna Pendakur, 2010. "Global Trade and the Maritime Transport Revolution," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 745-755, October.
Abstract: What is the role of transport improvements in globalization? We argue that the nineteenth century is the ideal testing ground for this question: freight rates fell on average by 50% while global trade increased 400% from 1870 to 1913. We estimate the first indices of bilateral freight rates for the period and directly incorporate these into a standard gravity model. We also take the endogeneity of bilateral trade and freight rates seriously and propose an instrumental variables approach. The results are striking as we find no evidence that the maritime transport revolution was the primary driver of the late nineteenth century global trade boom. Rather, the most powerful forces driving the boom were those of income growth and convergence.
Handle: RePEc:nbr:nberwo:14139
Template-Type: ReDIF-Paper 1.0
Title: Superstar CEOs
Classification-JEL: D21; D23; G14; G34; J33; M52
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Geoffrey Tate
Note: CF LE LS
Number: 14140
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14140
File-URL: http://www.nber.org/papers/w14140.pdf
File-Format: application/pdf
Publication-Status: published as Ulrike Malmendier & Geoffrey Tate, 2009. "Superstar CEOs," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1593-1638, November.
Abstract: Compensation, status, and press coverage of managers in the U.S. follow a highly skewed distribution: a small number of 'superstars' enjoy the bulk of the rewards. We evaluate the impact of CEOs achieving superstar status on the performance of their firms, using prestigious business awards to measure shocks to CEO status. We find that award-winning CEOs subsequently underperform, both relative to their prior performance and relative to a matched sample of non-winning CEOs. At the same time, they extract more compensation following the award, both in absolute amounts and relative to other top executives in their firms. They also spend more time on public and private activities outside their companies, such as assuming board seats or writing books. The incidence of earnings management increases after winning awards. The effects are strongest in firms with weak governance, even though the frequency of obtaining superstar status is independent of corporate governance. Our results suggest that the ex-post consequences of media-induced superstar status for shareholders are negative.
Handle: RePEc:nbr:nberwo:14140
Template-Type: ReDIF-Paper 1.0
Title: Henry Agard Wallace, the Iowa Corn Yield Tests, and the Adoption of Hybrid Corn
Classification-JEL: N12
Author-Name: Richard C. Sutch
Note: DAE
Number: 14141
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14141
File-URL: http://www.nber.org/papers/w14141.pdf
File-Format: application/pdf
Abstract: This research report makes the following claims: 1] There was not an unambiguous economic advantage of hybrid corn over the open-pollinated varieties in 1936. 2] The early adoption of hybrid corn before 1937 can be better explained by a sustained propaganda campaign conducted by the U.S. Department of Agriculture at the direction of the Secretary of Agriculture, Henry Agard Wallace. The Department's campaign echoed that of the commercial seed companies. The most prominent hybrid seed company, Pioneer Hi-Bred Company, was founded by Wallace and he retained a financial interest while serving as Secretary. 3] The early adopters of hybrid seed were followed by later adopters as a consequence of the droughts of 1934 and especially 1936. The eventual improvement of yields as newer varieties were introduced explains the continuation and acceleration of the process.
Handle: RePEc:nbr:nberwo:14141
Template-Type: ReDIF-Paper 1.0
Title: Biological Innovation and Productivity Growth in the Antebellum Cotton Economy
Classification-JEL: J43; N11; N5; O3
Author-Name: Alan L. Olmstead
Author-Person: pol50
Author-Name: Paul W. Rhode
Author-Person: prh14
Note: DAE
Number: 14142
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14142
File-URL: http://www.nber.org/papers/w14142.pdf
File-Format: application/pdf
Publication-Status: published as Olmstead, Alan L. & Rhode, Paul W., 2008. "Biological Innovation and Productivity Growth in the Antebellum Cotton Economy," The Journal of Economic History, Cambridge University Press, vol. 68(04), pages 1123-1171, December.
Abstract: The Cliometrics literature on slave efficiency has generally focused on static questions. We take a decidedly more dynamic approach. Drawing on the records of 142 plantations with 509 crops years, we show that the average daily cotton picking rate increased about four-fold between 1801 and 1862. We argue that the development and diffusion of new cotton varieties were the primary sources of the increased efficiency. These finding have broad implications for understanding the South's preeminence in the world cotton market, the pace of westward expansion, and the importance of indigenous technological innovation.
Handle: RePEc:nbr:nberwo:14142
Template-Type: ReDIF-Paper 1.0
Title: Ambiguity and Extremism in Elections
Classification-JEL: H1
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Richard T. Holden
Author-Person: pho195
Note: POL
Number: 14143
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14143
File-URL: http://www.nber.org/papers/w14143.pdf
File-Format: application/pdf
Abstract: We analyze a model in which voters are uncertain about the policy preferences of candidates. Two forces affect the probability of electoral success: proximity to the median voter and campaign contributions. First, we show how campaign contributions affect elections. Then we show how the candidates may wish to announce a range of policy preferences, rather than a single point. This strategic ambiguity balances voter beliefs about the appeal of candidates both to the median voter and to the campaign contributors. If primaries precede a general election, they add another incentive for ambiguity, because in the primaries the candidates do not want to reveal too much information, to maintain some freedom of movement in the policy space for the general election. Ambiguity has an option value.
Handle: RePEc:nbr:nberwo:14143
Template-Type: ReDIF-Paper 1.0
Title: A New Method to Estimate Risk and Return of Non-Traded Assets from Cash Flows: The Case of Private Equity Funds
Classification-JEL: G12; G23
Author-Name: Joost Driessen
Author-Name: Tse-Chun Lin
Author-Name: Ludovic Phalippou
Author-Person: pph59
Note: AP CF
Number: 14144
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14144
File-URL: http://www.nber.org/papers/w14144.pdf
File-Format: application/pdf
Publication-Status: published as Driessen, Joost & Lin, Tse-Chun & Phalippou, Ludovic, 2012. "A New Method to Estimate Risk and Return of Nontraded Assets from Cash Flows: The Case of Private Equity Funds," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 47(03), pages 511-535, June.
Abstract: We develop a new GMM-style methodology with good small-sample properties to assess the abnormal performance and risk exposure of a non-traded asset from a cross-section of cash flow data. We apply this method to a sample of 958 mature private equity funds spanning 24 years. Our methodology uses actual cash flow data and not intermediary self-reported Net Asset Values. In addition, it does not require a distributional assumption for returns. For venture capital funds, we find a high market beta and significant under-performance. For buyout funds, we find a low beta and no abnormal performance, but the sample is small. Larger funds have higher returns due to higher risk exposures and not higher alphas. We also find that Net Asset Values significantly overstate fund market values for the subset of mature and inactive funds.
Handle: RePEc:nbr:nberwo:14144
Template-Type: ReDIF-Paper 1.0
Title: Executive Compensation: A New View from a Long-Term Perspective, 1936-2005
Classification-JEL: G30; J33; M52; N82
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Raven E. Saks
Note: CF DAE LS
Number: 14145
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14145
File-URL: http://www.nber.org/papers/w14145.pdf
File-Format: application/pdf
Publication-Status: published as Carola Frydman & Raven E. Saks, 2010. "Executive Compensation: A New View from a Long-Term Perspective, 1936--2005," Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 2099-2138.
Abstract: We analyze the long-run trends in executive compensation using a new panel dataset of top executives in large publicly-held firms from 1936 to 2005, collected from corporate reports. This historic perspective reveals several surprising new facts that conflict with inferences based only on data from the recent decades. First, the median real value of compensation was remarkably flat from the end of World War II to the mid-1970s, even during times of rapid economic expansion and aggregate firm growth. This finding contrasts sharply with the steep upward trajectory of pay over the past thirty years, which coincided with a period of similarly large increases in aggregate firm size. A second surprising finding is that the sensitivity of an executive's wealth to firm performance was not inconsequentially small for most of our sample period. Thus, recent years were not the first time when compensation arrangements served to align managerial incentives with those of shareholders. Taken together, the long-run trends in the level and structure of compensation pose a challenge to several common explanations for the widely-debated surge in executive pay of the past several decades, including changes in firms' size, rent extraction by CEOs, and increases in managerial incentives.
Handle: RePEc:nbr:nberwo:14145
Template-Type: ReDIF-Paper 1.0
Title: U.S. Defense Contracts During the Tax Expenditure Battles of the 1980s
Classification-JEL: H25; H57
Author-Name: Susan Guthrie
Author-Name: James R. Hines, Jr.
Author-Person: phi111
Note: PE
Number: 14146
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14146
File-URL: http://www.nber.org/papers/w14146.pdf
File-Format: application/pdf
Publication-Status: published as Susan J. Guthrie & Hines, James R. Jr., 2011. "U.S. DEFENSE CONTRACTS DURING THE TAX EXPENDITURE BATTLES OF THE 1980s," National Tax Journal, National Tax Association, vol. 64(2), pages 731-51, June Cita.
Publication-Status: published as US Defense Contracts during the Tax Expenditure Battles of the 1980s, Susan J. Guthrie, James R. Hines Jr.. in Economic Analysis of Tax Expenditures, Poterba. 2011
Abstract: This paper considers the impact of the tax treatment of U.S. military contractors. Prior to the early 1980s, taxpayers were permitted to use the completed contract method of accounting to defer taxation of profits earned on long term contracts. Legislation passed in 1982, 1986 and 1987 required that at least 70 percent of the profits earned on long-term contracts be taxed as accrued, thereby significantly reducing the tax benefits associated with long term contracting. Comparing contracts that were ineligible for the tax benefits associated with long term contracting with those that were eligible, it appears that between 1981 and 1989 the duration of U.S. Department of Defense contracts shortened by an average of between one and 3.5 months, or somewhere between 6 and 29 percent of average contract length. This pattern suggests that the tax benefits associated with long term contracts promoted artificial contract lengthening prior to passage of the 1986 Act. The evidence is consistent with a behavioral model in which the Department of Defense ignores the federal income tax consequences of its procurement actions, thereby indirectly rewarding contractors who are able to benefit from tax expenditures of various types.
Handle: RePEc:nbr:nberwo:14146
Template-Type: ReDIF-Paper 1.0
Title: Comparing Price and Non-Price Approaches to Urban Water Conservation
Classification-JEL: L95; Q25; Q28
Author-Name: Sheila M. Olmstead
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE IO LE PE
Number: 14147
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14147
File-URL: http://www.nber.org/papers/w14147.pdf
File-Format: application/pdf
Abstract: Urban water conservation is typically achieved through prescriptive regulations, including the rationing of water for particular uses and requirements for the installation of particular technologies. A significant shift has occurred in pollution control regulations toward market-based policies in recent decades. We offer an analysis of the relative merits of market-based and prescriptive approaches to water conservation, where prices have rarely been used to allocate scarce supplies. The analysis emphasizes the emerging theoretical and empirical evidence that using prices to manage water demand is more cost-effective than implementing non-price conservation programs, similar to results for pollution control in earlier decades. Price-based approaches also have advantages in terms of monitoring and enforcement. In terms of predictability and equity, neither policy instrument has an inherent advantage over the other. As in any policy context, political considerations are important.
Handle: RePEc:nbr:nberwo:14147
Template-Type: ReDIF-Paper 1.0
Title: The Opportunity Cost of Capital of US Buyouts
Classification-JEL: G24; G32
Author-Name: Alexander Peter Groh
Author-Name: Oliver Gottschalg
Note: AP
Number: 14148
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14148
File-URL: http://www.nber.org/papers/w14148.pdf
File-Format: application/pdf
Abstract: This paper measures the risk-adjusted performance of US buyouts. It draws on a unique and proprietary set of data on 133 US buyouts between 1984 and 2004. For each of them we determine a public market equivalent that matches it with respect to its timing and its systematic risk. After a correction for selection bias in our data, the regression of the buyout internal rates of return on the internal rates of return of the mimicking portfolio yields a positive and statistically significant alpha. Our sensitivity analyses highlight the necessity of a comprehensive risk-adjustment that considers both operating risk and leverage risk for an accurate assessment of buyout performance. This finding is particularly important as existing literature on that topic tends to rely on performance measures without a proper risk-adjustment.
Handle: RePEc:nbr:nberwo:14148
Template-Type: ReDIF-Paper 1.0
Title: Tax Incentives for Affordable Housing: The Low Income Housing Tax Credit
Classification-JEL: H2; H76; R31; R51
Author-Name: Mihir A. Desai
Author-Name: Dhammika Dharmapala
Author-Person: pdh6
Author-Name: Monica Singhal
Author-Person: psi159
Note: PE
Number: 14149
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14149
File-URL: http://www.nber.org/papers/w14149.pdf
File-Format: application/pdf
Publication-Status: published as Tax Incentives for Affordable Housing: The Low Income Housing Tax Credit, Mihir Desai, Dhammika Dharmapala, Monica Singhal. in Tax Policy and the Economy, Volume 24, Brown. 2010
Abstract: The Low Income Housing Tax Credit (LIHTC) represents a novel tax expenditure program that employs "investable" tax credits to spur production of low-income rental housing. While it has grown into the largest source of new affordable housing in the U.S. and its structure is now being replicated in other programs, the LIHTC has also drawn skepticism and calls for its repeal. We provide estimates of tax expenditures under this program and discuss pricing, efficiency, and distributional effects of the program. We also consider the impacts of the recent financial crisis on the LIHTC program and explore implications of resulting policy changes and proposals.
Handle: RePEc:nbr:nberwo:14149
Template-Type: ReDIF-Paper 1.0
Title: From the New Wave to the New Hollywood: The Life Cycles of Important Movie Directors from Godard and Truffaut to Spielberg and Eastwood
Classification-JEL: J01
Author-Name: David Galenson
Author-Name: Joshua Kotin
Note: LS
Number: 14150
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14150
File-URL: http://www.nber.org/papers/w14150.pdf
File-Format: application/pdf
Publication-Status: published as David W. Galenson & Joshua Kotin, 2010. "From the New Wave to the New Hollywood," Historical Methods: A Journal of Quantitative and Interdisciplinary History, vol 43(1), pages 29-44.
Abstract: Two great movie directors were both born in 1930. One of them, Jean-Luc Godard, revolutionized filmmaking during his 30s, and declined in creativity thereafter. In contrast, Clint Eastwood did not direct his first movie until he had passed the age of 40, and did not emerge as an important director until after 60. This dramatic difference in life cycles was not accidental, but was a characteristic example of a pattern that has been identified across the arts: Godard was a conceptual innovator who peaked early, whereas Eastwood was an experimental innovator who improved with experience. This paper examines the goals, methods, and creative life cycles of Godard, Eastwood, and eight other directors who were the most important filmmakers of the second half of the twentieth century. Francis Ford Coppola, Stanley Kubrick, Stephen Spielberg, and François Truffaut join Godard in the category of conceptual young geniuses, while Woody Allen, Robert Altman, John Cassavetes, and Martin Scorsese are classed with Eastwood as experimental old masters. In an era in which conceptual innovators have dominated a number of artistic activities, the strong representation of experimental innovators among the greatest film directors is an interesting phenomenon.
Handle: RePEc:nbr:nberwo:14150
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomics and ARCH
Classification-JEL: E52
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EFG ME
Number: 14151
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14151
File-URL: http://www.nber.org/papers/w14151.pdf
File-Format: application/pdf
Publication-Status: published as Macroeconomics and ARCH, in Festschrift in Honor of Robert F. Engle, pp. 79-96, edited by Tim Bollerslev, Jeffry R. Russell and Mark Watson, Oxford University Press, 2010.
Abstract: Although ARCH-related models have proven quite popular in finance, they are less frequently used in macroeconomic applications. In part this may be because macroeconomists are usually more concerned about characterizing the conditional mean rather than the conditional variance of a time series. This paper argues that even if one's interest is in the conditional mean, correctly modeling the conditional variance can still be quite important, for two reasons. First, OLS standard errors can be quite misleading, with a "spurious regression" possibility in which a true null hypothesis is asymptotically rejected with probability one. Second, the inference about the conditional mean can be inappropriately influenced by outliers and high-variance episodes if one has not incorporated the conditional variance directly into the estimation of the mean, and infinite relative efficiency gains may be possible. The practical relevance of these concerns is illustrated with two empirical examples from the macroeconomics literature, the first looking at market expectations of future changes in Federal Reserve policy, and the second looking at changes over time in the Fed's adherence to a Taylor Rule.
Handle: RePEc:nbr:nberwo:14151
Template-Type: ReDIF-Paper 1.0
Title: An Institutional Theory of Public Contracts: Regulatory Implications
Classification-JEL: H11; L14; L32; L33; L51
Author-Name: Pablo T. Spiller
Author-Person: psp34
Note: LE
Number: 14152
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14152
File-URL: http://www.nber.org/papers/w14152.pdf
File-Format: application/pdf
Abstract: The fundamental feature of private contracting is its relational nature. When faced with unforeseen or unexpected circumstances, private parties, as long as the relation remains worthwhile, adjust their required performance without the need for costly renegotiation or formal recontracting. Public contracting, on the other hand, seems to be characterized by formalized, standardized, bureaucratic, rigid procedures. Common wisdom sees public contracts as generally more inflexible, requiring more frequent formal renegotiation, having a higher tendency to litigate, and providing weaker incentives. In sum, public contracts are perceived to be less "efficient." In this paper I develop a theory of public contracting that accommodates these stark differences between private and public contracting. The thrust of the paper is that these differences arise directly because of the different hazards present in public and purely private contracts, which directly impact the nature of the resulting contractual forms. A fundamental corollary of this result is that the perceived inefficiency of public or governmental contracting is simply the result of contractual adaptation to different inherent hazards, and as such is not directly remediable. Finally, I apply the main insights from the general framework developed here to understand the characteristics of concession contracts.
Handle: RePEc:nbr:nberwo:14152
Template-Type: ReDIF-Paper 1.0
Title: Pricing and Welfare in Health Plan Choice
Classification-JEL: D40; D61; D82; I11; L11
Author-Name: M. Kate Bundorf
Author-Name: Jonathan D. Levin
Author-Person: ple318
Author-Name: Neale Mahoney
Note: EH IO PE
Number: 14153
Creation-Date: 2008-06
Order-URL: http://www.nber.org/papers/w14153
File-URL: http://www.nber.org/papers/w14153.pdf
File-Format: application/pdf
Publication-Status: published as M. Kate Bundorf & Jonathan Levin & Neale Mahoney, 2012. "Pricing and Welfare in Health Plan Choice," American Economic Review, American Economic Association, vol. 102(7), pages 3214-48, December.
Abstract: Prices in government and employer-sponsored health insurance markets only partially reflect insurers' expected costs of coverage for different enrollees. This can create inefficient distortions when consumers self-select into plans. We develop a simple model to study this problem and estimate it using new data on small employers. In the markets we observe, the welfare loss compared to the feasible efficient benchmark is around 2-11% of coverage costs. Three-quarters of this is due to restrictions on risk-rating employee contributions; the rest is due to inefficient contribution choices. Despite the inefficiency, we find substantial benefits from plan choice relative to single-insurer options.
Handle: RePEc:nbr:nberwo:14153
Template-Type: ReDIF-Paper 1.0
Title: The Rise and Fall of the Dollar, or When Did the Dollar Replace Sterling as the Leading International Currency?
Classification-JEL: F0; F33; N1; N2
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Marc Flandreau
Author-Person: pfl22
Note: DAE IFM
Number: 14154
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14154
File-URL: http://www.nber.org/papers/w14154.pdf
File-Format: application/pdf
Publication-Status: published as Eichengreen, Barry & Flandreau, Marc, 2009. "The rise and fall of the dollar (or when did the dollar replace sterling as the leading reserve currency?)," European Review of Economic History, Cambridge University Press, vol. 13(03), pages 377-411, December.
Abstract: We present new evidence on the currency composition of foreign exchange reserves in the 1920s and 1930s. Contrary to the presumption that the pound sterling continued to dominate the U.S. dollar in central bank reserves until after World War II, we show that the dollar first overtook sterling in the mid-1920s. This suggests that the network effects thought to lend inertia to international currency status and to create incumbency advantages for the dominant international currency do not apply in the reserve currency domain. Our new evidence is similarly incompatible with the notion that there is only room in the market for one dominant reserve currency at a point in time. Our findings have important implications for our understanding of interwar monetary history but also for the prospects of the dollar and the euro as reserve currencies.
Handle: RePEc:nbr:nberwo:14154
Template-Type: ReDIF-Paper 1.0
Title: General Education vs. Vocational Training: Evidence from an Economy in Transition
Classification-JEL: I21; J24; P20
Author-Name: Ofer Malamud
Author-Person: pma2350
Author-Name: Cristian Pop-Eleches
Author-Person: ppo349
Note: ED
Number: 14155
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14155
File-URL: http://www.nber.org/papers/w14155.pdf
File-Format: application/pdf
Publication-Status: published as General Education vs. Vocational Training: Evidence from an Economy in Transition (with Cristian Pop-Eleches) Data Appendix Review of Economics and Statistics, Vol. 92, No. 1 (2010): 43-60
Abstract: This paper examines the relative benefits of general education and vocational training in Romania, a country which experienced major technological and institutional change during its transition from Communism to a market economy. To avoid the bias caused by non-random selection, we exploit a 1973 educational reform that shifted a large proportion of students from vocational training to general education while keeping average years of schooling unchanged. Using data from the 1992 and 2002 Romanian Censuses and household surveys from 1995-2000, we analyze the effect of this policy with a regression discontinuity design. We find that men in cohorts affected by the policy were significantly less likely to work in manual or craft-related occupations than their counterparts who were unaffected by the policy. However, in contrast to cross-sectional findings, we find no difference in labor market participation or earnings between cohorts affected and unaffected by the policy. We therefore conclude that differences in labor market returns between graduates of vocational and general schools are largely driven by selection.
Handle: RePEc:nbr:nberwo:14155
Template-Type: ReDIF-Paper 1.0
Title: Family Leave after Childbirth and the Health of New Mothers
Classification-JEL: I0; J08
Author-Name: Pinka Chatterji
Author-Person: pch732
Author-Name: Sara Markowitz
Author-Person: pma138
Note: CH EH LS
Number: 14156
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14156
File-URL: http://www.nber.org/papers/w14156.pdf
File-Format: application/pdf
Publication-Status: published as “Family Leave after Childbirth and the Health of New Mothers” (with Pinka Chatterji). Journal of Men tal Health Policy and Economics. 15:2 (June 2012) 61 - 76
Abstract: In the United States, almost a third of new mothers who worked during pregnancy return to work within three months of childbirth. Current public policies in the U.S. do not support long periods of family leave after childbirth, although some states are starting to change this. As such, it is vital to understand how length of family leave during the first year after childbirth affects families' health and wellbeing. The purpose of this paper is to examine the association between family leave length, which includes leave taking by mothers and fathers, and behavioral and physical health outcomes among new mothers. Using data from the Early Childhood Longitudinal Study - Birth Cohort, we examine measures of depression, overall health status, and substance use. We use a standard OLS as well as an instrumental variables approach with county-level employment conditions and state-level maternity leave policies as identifying instruments. The results suggest that longer maternity leave from work, both paid and un-paid, is associated with declines in depressive symptoms, a reduction in the likelihood of severe depression, and an improvement in overall maternal health. We also find that having a spouse that did not take any paternal leave after childbirth is associated with higher levels of maternal depressive symptoms. We do not find, however, that length of paternal leave is associated with overall maternal health, and we find only mixed evidence that leave length after childbirth affects maternal alcohol use and smoking.
Handle: RePEc:nbr:nberwo:14156
Template-Type: ReDIF-Paper 1.0
Title: The Value of Life in General Equilibrium
Classification-JEL: I1; I10; I31; J1; J17; O1
Author-Name: Anupam Jena
Author-Person: pje47
Author-Name: Casey Mulligan
Author-Person: pmu64
Author-Name: Tomas J. Philipson
Author-Person: pph37
Author-Name: Eric Sun
Author-Person: psu228
Note: EH
Number: 14157
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14157
File-URL: http://www.nber.org/papers/w14157.pdf
File-Format: application/pdf
Abstract: Perhaps the most important change of the last century was the great expansion of life itself -- in the US alone, life expectancy increased from 48 to 78 years. Recent economic estimates confirm this claim, finding that the economic value of the gain in longevity was on par with the value of growth in material well-being, as measured by income per capita. However, ever since Malthus, economists have recognized that demographic changes are linked to economic behavior and vice versa. Put simply, living with others who live 78 years is different than living with others who live only 48 years, so that valuing the extra 30 years of life is not simply a matter of valuing the extra years a single individual lives. The magnitude by which such valuations differ is overstated when there are increasing returns to population and is understated under decreasing returns. Focusing on the gains in life expectancy in the United States from 1900 to 2000, we find that a significant part of the value of longer life may be affected by these general equilibrium demographic effects.
Handle: RePEc:nbr:nberwo:14157
Template-Type: ReDIF-Paper 1.0
Title: Short Sales and Trade Classification Algorithms
Classification-JEL: G10; G12; G18
Author-Name: Paul Asquith
Author-Name: Rebecca Oman
Author-Name: Christopher Safaya
Note: AP
Number: 14158
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14158
File-URL: http://www.nber.org/papers/w14158.pdf
File-Format: application/pdf
Publication-Status: published as Asquith, Paul & Oman, Rebecca & Safaya, Christopher, 2010. "Short sales and trade classification algorithms," Journal of Financial Markets, Elsevier, vol. 13(1), pages 157-173, February.
Abstract: This paper demonstrates that short sales are often misclassified as buyer-initiated by the Lee-Ready and other commonly used trade classification algorithms. This result is due in part to regulations which require short sales be executed on an uptick or zero-uptick. In addition, while the literature considers "immediacy premiums" in determining trade direction, it ignores the often larger borrowing premiums which short sellers must pay. Since short sales constitute approximately 30% of all trade volume on U.S. exchanges, these results are important to the empirical market microstructure literature as well as to measures that rely upon trade classification, such as the probability of informed trading (PIN) metric.
Handle: RePEc:nbr:nberwo:14158
Template-Type: ReDIF-Paper 1.0
Title: Influence, Information Overload, and Information Technology in Health Care
Classification-JEL: D01; D8; I12; L86
Author-Name: James B. Rebitzer
Author-Person: pre77
Author-Name: Mari Rege
Author-Person: pre427
Author-Name: Christopher Shepard
Note: EH LS
Number: 14159
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14159
File-URL: http://www.nber.org/papers/w14159.pdf
File-Format: application/pdf
Abstract: We investigate whether information technology can help physicians more efficiently acquire new knowledge in a clinical environment characterized by information overload. Our analysis makes use of data from a randomized trial as well as a theoretical model of the influence that information technology has on the acquisition of new medical knowledge. Although the theoretical framework we develop is conventionally microeconomic, the model highlights the non-market and non-pecuniary influence activities that have been emphasized in the sociological literature on technology diffusion. We report three findings. First, empirical evidence and theoretical reasoning suggests that computer based decision support will speed the diffusion of new medical knowledge when physicians are coping with information overload. Secondly, spillover effects will likely lead to "underinvestment" in this decision support technology. Third, alternative financing strategies common to new information technology, such as the use of marketing dollars to pay for the decision support systems, may lead to undesirable outcomes if physician information overload is sufficiently severe and if there is significant ambiguity in how best to respond to the clinical issues identified by the computer.
Handle: RePEc:nbr:nberwo:14159
Template-Type: ReDIF-Paper 1.0
Title: Random Walk or A Run: Market Microstructure Analysis of the Foreign Exchange Rate Movements based on Conditional Probability
Classification-JEL: F31; F33; G15
Author-Name: Yuko Hashimoto
Author-Name: Takatoshi Ito
Author-Name: Takaaki Ohnishi
Author-Name: Misako Takayasu
Author-Name: Hideki Takayasu
Author-Name: Tsutomu Watanabe
Note: IFM ME
Number: 14160
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14160
File-URL: http://www.nber.org/papers/w14160.pdf
File-Format: application/pdf
Publication-Status: published as Yuko Hashimoto & Takatoshi Ito & Takaaki Ohnishi & Misako Takayasu & Hideki Takayasu & Tsutomu Watanabe, 2012. "Random walk or a run. Market microstructure analysis of foreign exchange rate movements based on conditional probability," Quantitative Finance, vol 12(6), pages 893-905.
Abstract: Using tick-by-tick data of the dollar-yen and euro-dollar exchange rates recorded in the actual transaction platform, a "run" -- continuous increases or decreases in deal prices for the past several ticks -- does have some predictable information on the direction of the next price movement. Deal price movements, that are consistent with order flows, tend to continue a run once it started i.e., conditional probability of deal prices tend to move in the same direction as the last several times in a row is higher than 0.5. However, quote prices do not show such tendency of a run. Hence, a random walk hypothesis is refuted in a simple test of a run using the tick by tick data. In addition, a longer continuous increase of the price tends to be followed by larger reversal. The findings suggest that those market participants who have access to real-time, tick-by-tick transaction data may have an advantage in predicting the exchange rate movement. Findings here also lend support to the momentum trading strategy.
Handle: RePEc:nbr:nberwo:14160
Template-Type: ReDIF-Paper 1.0
Title: Estimating Derivatives in Nonseparable Models with Limited Dependent Variables
Classification-JEL: C1; C14; C23; C24
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Hidehiko Ichimura
Author-Person: pic1
Author-Name: Taisuke Otsu
Note: TWP
Number: 14161
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14161
File-URL: http://www.nber.org/papers/w14161.pdf
File-Format: application/pdf
Publication-Status: published as Joseph G. Altonji & Hidehiko Ichimura & Taisuke Otsu, 2012. "Estimating Derivatives in Nonseparable Models With Limited Dependent Variables," Econometrica, Econometric Society, vol. 80(4), pages 1701-1719, 07.
Abstract: We present a simple way to estimate the effects of changes in a vector of observable variables X on a limited dependent variable Y when Y is a general nonseparable function of X and unobservables. We treat models in which Y is censored from above or below or potentially from both. The basic idea is to first estimate the derivative of the conditional mean of Y given X at x with respect to x on the uncensored sample without correcting for the effect of changes in x induced on the censored population. We then correct the derivative for the effects of the selection bias. We propose nonparametric and semiparametric estimators for the derivative. As extensions, we discuss the cases of discrete regressors, measurement error in dependent variables, and endogenous regressors in a cross section and panel data context.
Handle: RePEc:nbr:nberwo:14161
Template-Type: ReDIF-Paper 1.0
Title: Edgeworth Cycles Revisited
Classification-JEL: D4; L11; L70
Author-Name: Joseph J. Doyle, Jr.
Author-Name: Erich Muehlegger
Author-Person: pmu479
Author-Name: Krislert Samphantharak
Author-Person: psa1581
Note: EEE IO
Number: 14162
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14162
File-URL: http://www.nber.org/papers/w14162.pdf
File-Format: application/pdf
Publication-Status: published as Doyle, Joseph & Muehlegger, Erich & Samphantharak, Krislert, 2010. "Edgeworth cycles revisited," Energy Economics, Elsevier, vol. 32(3), pages 651-660, May.
Abstract: Some gasoline markets exhibit remarkable price cycles, where price spikes are followed by a string of small price declines until the next price spike. This pattern is predicted from a model of competition driven by Edgeworth cycles, as described by Maskin and Tirole. We extend the Maskin and Tirole model and empirically test its predictions with a new dataset of daily station-level prices in 115 US cities. One innovation is that we also examine cycling within cities, which allows controls for city fixed effects. Consistent with the theory, and often in contrast with previous empirical work, we find that the least and most concentrated markets are much less likely to exhibit cycling behavior; and the areas with more independent retailers that have convenience stores are more likely to cycle. We also find that the average gasoline prices are relatively unrelated to cycling behavior.
Handle: RePEc:nbr:nberwo:14162
Template-Type: ReDIF-Paper 1.0
Title: Reconsideration of the P-Bar Model of Gradual Price Adjustment
Classification-JEL: E30; E52
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 14163
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14163
File-URL: http://www.nber.org/papers/w14163.pdf
File-Format: application/pdf
Publication-Status: published as McCallum, Bennett T., 2008. "Reconsideration of the P-bar model of gradual price adjustment," European Economic Review, Elsevier, vol. 52(8), pages 1480-1493, November.
Abstract: This paper compares the P-bar model of price adjustment with the currently dominant Calvo specification. Theoretically, the P-bar model is more attractive as it depends upon adjustment costs for physical quantities rather than nominal prices, while incorporating a one-period information lag. Furthermore, the resulting adjustment relation is more completely free of "money illusion," in terms of dynamic relationships, and therefore satisfies the natural rate hypothesis of Lucas (1972), which is not satisfied by the Calvo model in any of its variants. Along the way, it shows that both the P-bar and Calvo models can be formulated in distinct versions in which current real wages are, or are not, allocative. Quantitatively, for a given calibration of the demand parameters, the implied time series properties of the inflation rate, output gap, and nominal interest rate are determined for various policy parameters, and are compared with quarterly data for the U.S. economy. Neither model dominates but, overall, the comparison seems somewhat more favorable to the P-bar model and certainly does not provide support for the dominant position held by the Calvo model in current monetary policy analysis.
Handle: RePEc:nbr:nberwo:14163
Template-Type: ReDIF-Paper 1.0
Title: Determinacy, Learnability, and Plausibility in Monetary Policy Analysis: Additional Results
Classification-JEL: C62; E30; E52
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 14164
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14164
File-URL: http://www.nber.org/papers/w14164.pdf
File-Format: application/pdf
Publication-Status: published as Bennett T. McCallum, 2009. "Determinacy, Learnability, and Plausibility in Monetary Policy Analysis: Additional Results," Central Banking, Analysis, and Economic Policies Book Series, in: Klaus Schmidt-Hebbel & Carl E. Walsh & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy under Uncertainty and Learning, edition 1, volume 13, chapter 7, pages 203-225 Central Bank of Chile.
Abstract: In a very broad class of dynamic linear models, if agents possess knowledge of current endogenous variables in a least-squares learning process, determinacy of a rational expectations (RE) equilibrium is sufficient but not necessary for learnability of that equilibrium. Thus, since learnability is an attractive necessary condition for plausibility of any equilibrium, there may exist a single plausible RE solution even in cases of indeterminacy. This paper proposes and outlines a distinct criterion that plausible models should possess, termed "well formulated" (WF), which rules out infinite discontinuities in the implied impulse response functions. The paper explores the relationship between this WF property and learnability, under the information assumption mentioned above, and finds that they often agree but neither strictly implies the other. Extending the P-matrix requirement, implied for specified matrices by the WF property, to one that demands positive dominant-diagonal matrices would guarantee both WF and learnability, but a suitable rationale has not been found. Finally, under a second information assumption, which gives the agents only lagged information on endogenous variables during the learning process, the situation is less favorable in the sense that learnability can be guaranteed only under special assumptions.
Handle: RePEc:nbr:nberwo:14164
Template-Type: ReDIF-Paper 1.0
Title: Global Portfolio Rebalancing Under the Microscope
Classification-JEL: F3; F32; G11; G15
Author-Name: Harald Hau
Author-Person: pha313
Author-Name: Hélène Rey
Author-Person: pre8
Note: AP IFM
Number: 14165
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14165
File-URL: http://www.nber.org/papers/w14165.pdf
File-Format: application/pdf
Abstract: Cross border capital flows and returns on assets are two key variables in international macroeconomics. Difficult endogeneity issues plague any analysis of their correlations in aggregate data. This paper examines the dynamics of international portfolios with a unique data set on the stock allocations of approximately 6,500 international equity funds domiciled in four different currency areas during a 5 year period. The disaggregated data structure allows us to examine the effect of realized returns on portfolio adjustments. Do managers rebalance their portfolios towards their desired weights or do they increase their exposure to appreciating assets? We find strong support for portfolio rebalancing behavior aimed at stabilizing exchange rate risk and equity risk exposure around desired levels. These findings are important for the new open economy macroeconomics models featuring endogenous portfolio choice. They should also help inform the burgeoning theoretical literature in macroeconomics and in finance that aims at modeling financial intermediaries.
Handle: RePEc:nbr:nberwo:14165
Template-Type: ReDIF-Paper 1.0
Title: E-commerce and the Market Structure of Retail Industries
Classification-JEL: D4; L1; L8
Author-Name: Maris Goldmanis
Author-Name: Ali Hortacsu
Author-Name: Chad Syverson
Author-Person: psy13
Author-Name: Onsel Emre
Note: IO PR
Number: 14166
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14166
File-URL: http://www.nber.org/papers/w14166.pdf
File-Format: application/pdf
Publication-Status: published as Maris Goldmanis & Ali Hortaçsu & Chad Syverson & Önsel Emre, 2010. "E-Commerce and the Market Structure of Retail Industries," Economic Journal, Royal Economic Society, vol. 120(545), pages 651-682, 06.
Abstract: While a fast-growing body of research has looked at how the advent and diffusion of e-commerce has affected prices, much less work has investigated e-commerce's impact on the number and type of producers operating in an industry. This paper theoretically and empirically takes up the question of which businesses most benefit and most suffer as consumers switch to purchasing products online. We specify a general industry model involving consumers with differing search costs buying products from heterogeneous-type producers. We interpret e-commerce as having reduced consumers' search costs. We show how such reductions reallocate market shares from an industry's low-type producers to its high-type businesses. We test the model using U.S. data for three industries in which e-commerce has arguably decreased consumers' search costs considerably: travel agencies, bookstores, and new auto dealers. Each industry exhibits the market share shifts predicted by the model. Interestingly, while the industries experienced similar changes, the specific mechanisms through which e-commerce induced them differed. For bookstores and auto dealers, industry-wide declines in small outlets reflected market-specific impacts, evidenced by the fact that more small-store exit occurred in local markets where consumers' use of e-commerce channels grew fastest. For travel agencies, on the other hand, the shifts reflected aggregate changes driven by airlines cutting agent commissions as consumers started buying tickets online.
Handle: RePEc:nbr:nberwo:14166
Template-Type: ReDIF-Paper 1.0
Title: Lifting the Curse of Dimensionality: Measures of the Labor Legislation Climate in the States During the Progressive Era
Classification-JEL: J18; K31; N31; N32; N41; N42
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: Rebecca Holmes
Author-Name: Samuel Allen
Note: DAE LE LS
Number: 14167
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14167
File-URL: http://www.nber.org/papers/w14167.pdf
File-Format: application/pdf
Publication-Status: published as Price V. Fishback & Rebecca Holmes & Samuel Allen, 2009. "Lifting the curse of dimensionality: measures of the states' labor legislation climate in the United States during the progressive era," Labor History, vol 50(3), pages 313-346.
Abstract: One of the most difficult problems in the social sciences is measuring the policy climate in societies. Prior to the 1930s the vast majority of labor regulations in the U.S. were enacted at the state level. In this paper we develop several summary measures of labor regulation that document the changes in labor regulation across states and over time during the Progressive Era. The measures include an Employer-Share-Weighted Index (ESWI) that weights regulations by the share of workers affected and builds up the overall index from 17 categories of regulation; the number of pages of laws; appropriations for spending on labor issues per worker; and two nonparametric COORDINATES that summarize locations in a policy space. We describe the pluses and minuses of the measures, how strongly they are correlated, and show the stories that they tell about the changes in labor regulation during the progressive era. We then provide preliminary evidence on the extent to which the labor regulation measures are associated with political and economic correlates identified as important in histories of industrial relations and labor markets.
Handle: RePEc:nbr:nberwo:14167
Template-Type: ReDIF-Paper 1.0
Title: Pitfalls in Measuring Exchange Rate Misalignment: The Yuan and Other Currencies
Classification-JEL: F31; F41
Author-Name: Yin-Wong Cheung
Author-Person: pch261
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Eiji Fujii
Author-Person: pfu65
Note: IFM
Number: 14168
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14168
File-URL: http://www.nber.org/papers/w14168.pdf
File-Format: application/pdf
Publication-Status: published as Yin-Wong Cheung & Menzie Chinn & Eiji Fujii, 2009. "Pitfalls in Measuring Exchange Rate Misalignment," Open Economies Review, Springer, vol. 20(2), pages 183-206, April.
Abstract: We evaluate whether the Renminbi (RMB) is misaligned, relying upon conventional statistical methods of inference. A framework built around the relationship between relative price and relative output levels is used. We find that, once sampling uncertainty and serial correlation are accounted for, there is little statistical evidence that the RMB is undervalued, even though the point estimates usually indicate economically significant misalignment. The result is robust to various choices of country samples and sample periods, as well as to the inclusion of control variables. We then update the results using the latest vintage of the data to demonstrate how fragile the results are. We find that whatever misalignment we detected in our previous work disappears in this data set.
Handle: RePEc:nbr:nberwo:14168
Template-Type: ReDIF-Paper 1.0
Title: Efficient Prediction of Excess Returns
Classification-JEL: C22; C53; G14
Author-Name: Jon Faust
Author-Person: pfa9
Author-Name: Jonathan H. Wright
Author-Person: pwr25
Note: AP ME
Number: 14169
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14169
File-URL: http://www.nber.org/papers/w14169.pdf
File-Format: application/pdf
Publication-Status: published as Jon Faust & Jonathan H. Wright, 2011. "Efficient Prediction of Excess Returns," Review of Economics and Statistics, vol 93(2), pages 647-659.
Abstract: It is well known that augmenting a standard linear regression model with variables that are correlated with the error term but uncorrelated with the original regressors will increase asymptotic efficiency of the original coefficients. We argue that in the context of predicting excess returns, valid augmenting variables exist and are likely to yield substantial gains in estimation efficiency and, hence, predictive accuracy. The proposed augmenting variables are ex post measures of an unforecastable component of excess returns: ex post errors from macroeconomic survey forecasts and the surprise components of asset price movements around macroeconomic news announcements. These "surprises" cannot be used directly in forecasting--they are not observed at the time that the forecast is made--but can nonetheless improve forecasting accuracy by reducing parameter estimation uncertainty. We derive formal results about the benefits and limits of this approach and apply it to standard examples of forecasting excess bond and equity returns. We find substantial improvements in out-of-sample forecast accuracy for standard excess bond return regressions; gains for forecasting excess stock returns are much smaller.
Handle: RePEc:nbr:nberwo:14169
Template-Type: ReDIF-Paper 1.0
Title: Optimal Policy with Heterogeneous Preferences
Classification-JEL: D61; D62; D63; H21; H23; H24; H43; K34
Author-Name: Louis Kaplow
Author-Person: pka44
Note: EEE LE PE
Number: 14170
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14170
File-URL: http://www.nber.org/papers/w14170.pdf
File-Format: application/pdf
Publication-Status: published as Louis Kaplow, 2008. "Optimal Policy with Heterogeneous Preferences," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 8(1).
Abstract: Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and externalities are heterogeneous. When preference differences are observable, standard second-best results in basic settings are unaffected, except those for the optimal income tax. Optimal levels of income taxation may be higher, the same, or lower on types who derive more utility from various goods, depending on the nature of preference differences and the concavity of the social welfare function. When preference differences are unobservable, all policy rules may change. The determinants of even the direction of optimal rule adjustments are many and subtle.
Handle: RePEc:nbr:nberwo:14170
Template-Type: ReDIF-Paper 1.0
Title: On the Sources of the Great Moderation
Classification-JEL: E32
Author-Name: Jordi Gali
Author-Person: pga43
Author-Name: Luca Gambetti
Note: EFG
Number: 14171
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14171
File-URL: http://www.nber.org/papers/w14171.pdf
File-Format: application/pdf
Publication-Status: published as Jordi Galí & Luca Gambetti, 2009. "On the Sources of the Great Moderation," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 26-57, January
Publication-Status: published as Luca Gambetti & Jordi GalÃ, 2007. "On the sources of the Great Moderation," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
Abstract: The remarkable decline in macroeconomic volatility experienced by the U.S. economy since the mid-80s (the so-called Great Moderation) has been accompanied by large changes in the patterns of comovements among output, hours and labor productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse responses to identified shocks. Among other changes, our findings point to (i) an increase in the volatility of hours relative to output, (ii) a shrinking contribution of non-technology shocks to output volatility, and (iii) a change in the cyclical response of labor productivity to those shocks. That evidence suggests a more complex picture than that associated with "good luck" explanations of the Great Moderation.
Handle: RePEc:nbr:nberwo:14171
Template-Type: ReDIF-Paper 1.0
Title: Home Bias at the Fund Level
Classification-JEL: F21; G15
Author-Name: Harald Hau
Author-Person: pha313
Author-Name: Helene Rey
Author-Person: pre8
Note: AP IFM
Number: 14172
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14172
File-URL: http://www.nber.org/papers/w14172.pdf
File-Format: application/pdf
Publication-Status: published as Harald Hau & Helene Rey, 2008. "Home Bias at the Fund Level," American Economic Review, American Economic Association, vol. 98(2), pages 333-38, May.
Abstract: This paper presents new stylized facts on the distribution of the home bias at the fund level. We find (i) a large heterogeneity in the degree of home bias across mutual funds; (ii) a positive correlation between the size of funds and home bias; and (iii) a positive correlation between the size of funds, the number of foreign countries and the number of sectors in which they invest. These facts constitute a challenge for existing theories.
Handle: RePEc:nbr:nberwo:14172
Template-Type: ReDIF-Paper 1.0
Title: Has Public Health Insurance for Older Children Reduced Disparities in Access to Care and Health Outcomes?
Classification-JEL: I11; I12
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Sandra Decker
Author-Name: Wanchuan Lin
Author-Person: pli411
Note: CH EH PE
Number: 14173
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14173
File-URL: http://www.nber.org/papers/w14173.pdf
File-Format: application/pdf
Publication-Status: published as Currie, Janet & Decker, Sandra & Lin, Wanchuan, 2008. "Has public health insurance for older children reduced disparities in access to care and health outcomes?," Journal of Health Economics, Elsevier, vol. 27(6), pages 1567-1581, December.
Abstract: This paper investigates the effects of expanding public health insurance eligibility for older children. Using data from the National Health Interview Surveys from 1986 to 2005, we first show that although income continues to be an important predictor of children's health status, the importance of income for predicting health has fallen for children 9 to 17 in recent years. We then investigate the extent to which the dramatic expansions in public health insurance coverage for these children in the past decade are responsible for the decline in the importance of income. We find that while eligibility for public health insurance unambiguously improves current utilization of preventive care, it has little effect on current health status. However, we find some evidence that Medicaid eligibility in early childhood has positive effects on future health. This may indicate that adequate medical care early on puts children on a better health trajectory, resulting in better health as they grow.
Handle: RePEc:nbr:nberwo:14173
Template-Type: ReDIF-Paper 1.0
Title: Returns to Physician Human Capital: Analyzing Patients Randomized to Physician Teams
Classification-JEL: I12; J24
Author-Name: Joseph J. Doyle, Jr.
Author-Name: Steven M. Ewer
Author-Name: Todd H. Wagner
Note: AG EH LS
Number: 14174
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14174
File-URL: http://www.nber.org/papers/w14174.pdf
File-Format: application/pdf
Publication-Status: published as Returns to Physician Human Capital: Evidence from Patients Randomized to Physician Teams (with Todd Wagner & Steven Ewer) Journal of Health Economics 29(6). December 2010: 866-882.
Abstract: Patient sorting can confound estimates of the returns to physician human capital. This paper compares nearly 30,000 patients who were randomly assigned to clinical teams from one of two academic institutions. One institution is among the top medical schools in the country, while the other institution is ranked lower in the quality distribution. Patients treated by the two teams have identical observable characteristics and have access to a single set of facilities and ancillary staff. Those treated by physicians from the higher-ranked institution have 10-25% shorter and less expensive stays than patients assigned to the lower-ranked institution. Health outcomes are not related to the physician team assignment, and the estimates are precise. Procedure differences across the teams are consistent with the ability of physicians in the lower-ranked institution to substitute time and diagnostic tests for the faster judgments of physicians from the top-ranked institution.
Handle: RePEc:nbr:nberwo:14174
Template-Type: ReDIF-Paper 1.0
Title: Private Information and a Macro Model of Exchange Rates: Evidence from a Novel Data Set
Classification-JEL: D82; F31; F41; F47
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Michael J. Moore
Author-Person: pmo284
Note: IFM
Number: 14175
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14175
File-URL: http://www.nber.org/papers/w14175.pdf
File-Format: application/pdf
Abstract: We propose an exchange rate model which is a hybrid of the conventional specification with monetary fundamentals and the Evans-Lyons microstructure approach. It argues that the failure of the monetary model is principally due to private preference shocks which render the demand for money unstable. These shocks to liquidity preference are revealed through order flow. We estimate a model augmented with order flow variables, using a unique data set: almost 100 monthly observations on inter-dealer order flow on dollar/euro and dollar/yen. The augmented macroeconomic, or "hybrid", model exhibits out of sample forecasting improvement over the basic macroeconomic and random walk specifications.
Handle: RePEc:nbr:nberwo:14175
Template-Type: ReDIF-Paper 1.0
Title: School Competition and Efficiency with Publicly Funded Catholic Schools
Classification-JEL: I21
Author-Name: David Card
Author-Person: pca271
Author-Name: Martin Dooley
Author-Person: pdo101
Author-Name: Abigail Payne
Author-Person: ppa10
Note: ED LS
Number: 14176
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14176
File-URL: http://www.nber.org/papers/w14176.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Martin D. Dooley & A. Abigail Payne, 2010. "School Competition and Efficiency with Publicly Funded Catholic Schools," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 150-76, October.
Abstract: The province of Ontario has two publicly funded school systems: secular schools (known as public schools) that are open to all students, and separate schools that are open to children with Catholic backgrounds. The systems are administered independently and receive equal funding per student. In this paper we use detailed school and student-level data to assess whether competition between the systems leads to improved efficiency. Building on a simple model of school choice, we argue that incentives for effort will be greater in areas where there are more Catholic families, and where these families are less committed to a particular system. To measure the local determinants of cross-system competition we study the effects of school openings on enrollment growth at nearby elementary schools. We find significant cross-system responses to school openings, with a magnitude that is proportional to the fraction of Catholics in the area, and is higher in more rapidly growing areas. We then test whether schools that face greater cross-system competition have higher productivity, as measured by test score gains between 3rd and 6th grade. We estimate a statistically significant but modest-sized impact of potential competition on the growth rate of student achievement. The estimates suggest that extending competition to all students would raise average test scores in 6th grade by 6-8% of a standard deviation.
Handle: RePEc:nbr:nberwo:14176
Template-Type: ReDIF-Paper 1.0
Title: Fight or Flight? Portfolio Rebalancing by Individual Investors
Classification-JEL: D14; G11
Author-Name: Laurent E. Calvet
Author-Person: pca582
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Paolo Sodini
Author-Person: pso124
Note: AP
Number: 14177
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14177
File-URL: http://www.nber.org/papers/w14177.pdf
File-Format: application/pdf
Publication-Status: published as Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2009. "Fight Or Flight? Portfolio Rebalancing by Individual Investors-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 301-348, February.
Abstract: This paper investigates the dynamics of individual portfolios in a unique dataset containing the disaggregated wealth of all households in Sweden. Between 1999 and 2002, we observe little aggregate rebalancing in the financial portfolio of participants. These patterns conceal strong household-level evidence of active rebalancing, which on average offsets about one half of idiosyncratic passive variations in the risky asset share. Wealthy, educated investors with better diversified portfolios tend to rebalance more actively. We find some evidence that households rebalance towards a higher risky share as they become richer. We also study the decisions to trade individual assets. Households are more likely to fully sell directly held stocks if those stocks have performed well, and more likely to exit direct stockholding if their stock portfolios have performed well; but these relationships are much weaker for mutual funds, a pattern which is consistent with previous research on the disposition effect among direct stockholders and performance sensitivity among mutual fund investors. When households continue to hold individual assets, however, they rebalance both stocks and mutual funds to offset about one sixth of the passive variations in individual asset shares. Households rebalance primarily by adjusting purchases of risky assets if their risky portfolios have performed poorly, and by adjusting both fund purchases and full sales of stocks if their risky portfolios have performed well. Finally, the tendency for households to fully sell winning stocks is weaker for wealthy investors with diversified portfolios of individual stocks.
Handle: RePEc:nbr:nberwo:14177
Template-Type: ReDIF-Paper 1.0
Title: Factor Utilization in Indian Manufacturing: A Look at the World Bank Investment Climate Surveys Data
Classification-JEL: L11; L5; O4; O53
Author-Name: Ana M. Fernandes
Author-Person: pfe128
Author-Name: Ariel Pakes
Author-Person: ppa20
Note: IO PR
Number: 14178
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14178
File-URL: http://www.nber.org/papers/w14178.pdf
File-Format: application/pdf
Abstract: We use the World Bank Investment Climate Surveys data to analyze the employment of both labor and capital in Indian manufacturing. We focus on disparities among states in manufacturing employment patterns, and provide reduced form evidence of their relationship to both (i) institutional constraints, and (ii) productivity.
Handle: RePEc:nbr:nberwo:14178
Template-Type: ReDIF-Paper 1.0
Title: Saving Your Home in Chapter 13 Bankruptcy
Classification-JEL: G33; G38; K35; R31
Author-Name: Michelle J. White
Author-Person: pwh52
Author-Name: Ning Zhu
Note: LE
Number: 14179
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14179
File-URL: http://www.nber.org/papers/w14179.pdf
File-Format: application/pdf
Publication-Status: published as "Saving Your Home in Chapter 13 Bankruptcy," with Ning Zhu. NBER working paper 14179. Journal of Legal Studies, vol. 39:1, pp. 33-61, January 2010
Abstract: This paper examines how filing for bankruptcy under Chapter 13 helps financially distressed debtors save their homes. We develop a model of debtors' decisions to default on their mortgages and file for bankruptcy under Chapter 13 and evaluate the model using new data on Chapter 13 bankruptcy filers. We also examine the effect of allowing bankruptcy judges to reduce debtors' mortgage payments, i.e., introducing "cram-down" of mortgages in Chapter 13.
We find that 96% of Chapter 13 filers are homeowners and 79% of filers repay mortgage debt in their repayment plans; while just 9% of filers repay only unsecured debt in their plans. These results suggest that filers use Chapter 13 almost exclusively as a "save-your-home" procedure. But under current law, only about 1% Chapter 13 filers save their homes when they would otherwise have defaulted. If cram-down were introduced, we predict that this fraction would increase to 10%. The cost to lenders of introducing cram-down is estimated to be $264,000 per home saved and $30 billion in total.
Handle: RePEc:nbr:nberwo:14179
Template-Type: ReDIF-Paper 1.0
Title: The Investment Behavior of Buyout Funds: Theory and Evidence
Classification-JEL: G11; G23
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Author-Name: Matthew Richardson
Author-Name: Daniel Wolfenzon
Note: CF
Number: 14180
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14180
File-URL: http://www.nber.org/papers/w14180.pdf
File-Format: application/pdf
Publication-Status: published as Alexander Ljungqvist & Matthew Richardson & Daniel Wolfenzon, 2020. "The investment behavior of buyout funds: Theory and evidence," Financial Management, vol 49(1), pages 3-32.
Abstract: This paper analyzes the determinants of buyout funds' investment decisions. In a model in which the supply of capital is "sticky" in the short run, we link the timing of funds' investment decisions, their risk-taking behavior, and the returns they subsequently earn on their buyouts to changes in the demand for private equity, conditions in the credit market, and funds' ability to influence their perceived talent in the market. Using a proprietary dataset of 207 buyout funds that invested in 2,274 buyout targets over the last two decades, we then investigate the implications of the model. Our dataset contains precisely dated cash inflows and outflows in every portfolio company, links every buyout target to an identifiable buyout fund, and is free from reporting and survivor biases. Thus, we are able to characterize every buyout fund's precise investment choices. Our empirical findings are consistent with the model. First, established funds accelerate their investment flows and earn higher returns when investment opportunities improve, competition for deal flow eases, and credit market conditions loosen. Second, the investment behavior of first-time funds is less sensitive to market conditions. Third, younger funds invest in riskier buyouts, in an effort to establish a track record. Fourth, following periods of good performance, funds become more conservative, and this effect is stronger for younger funds.
Handle: RePEc:nbr:nberwo:14180
Template-Type: ReDIF-Paper 1.0
Title: Expectations, Learning and Business Cycle Fluctuations
Classification-JEL: D83; D84; E32
Author-Name: Stefano Eusepi
Author-Person: peu2
Author-Name: Bruce Preston
Author-Person: ppr134
Note: EFG ME
Number: 14181
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14181
File-URL: http://www.nber.org/papers/w14181.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Eusepi & Bruce Preston, 2011. "Expectations, Learning, and Business Cycle Fluctuations," American Economic Review, American Economic Association, vol. 101(6), pages 2844-72, October.
Abstract: This paper develops a theory of expectations-driven business cycles based on learning. Agents have incomplete knowledge about how market prices are determined and shifts in expectations of future prices affect dynamics. In a real business cycle model, the theoretical framework amplifies and propagates technology shocks. Improved correspondence with data arises from dynamics in beliefs being themselves persistent and because they generate strong intertemporal substitution effects in consumption and leisure. Output volatility is comparable with a rational expectations analysis with a standard deviation of technology shock that is 20 percent smaller, and has substantially more volatility in investment and hours. Persistence in these series is captured, unlike in standard models. Inherited from real business cycle theory, the benchmark model suffers a comovement problem between consumption, hours, output and investment. An augmented model that is consistent with expectations-driven business cycles, in the sense of Beaudry and Portier (2006), resolves these counterfactual predictions.
Handle: RePEc:nbr:nberwo:14181
Template-Type: ReDIF-Paper 1.0
Title: The Greatest Architects of the Twentieth Century: Goals, Methods, and Life Cycles
Classification-JEL: J01
Author-Name: David Galenson
Note: LS
Number: 14182
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14182
File-URL: http://www.nber.org/papers/w14182.pdf
File-Format: application/pdf
Abstract: A survey of textbooks reveals that Le Corbusier was the greatest architect of the twentieth century, followed by Frank Lloyd Wright and Ludwig Mies van der Rohe. The same evidence shows that the greatest architects alive today are Frank Gehry and Renzo Piano. Scholars have long been aware of the differing approaches of architects who have embraced geometry and those who have been inspired by nature, but they have never compared the life cycles of these two groups. The present study demonstrates that, as in other arts, conceptual architects have made their greatest innovations early in their careers, whereas experimental architects have done their most important work late in their lives. Remarkably, the experimentalists Le Corbusier and Frank Gehry designed their greatest buildings after the age of 60, and Frank Lloyd Wright designed his after 70.
Handle: RePEc:nbr:nberwo:14182
Template-Type: ReDIF-Paper 1.0
Title: Strategic Judgment Proofing
Classification-JEL: D21; D62; G32; G38; K13; K22
Author-Name: Yeon-Koo Che
Author-Person: pch91
Author-Name: Kathryn E. Spier
Note: LE
Number: 14183
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14183
File-URL: http://www.nber.org/papers/w14183.pdf
File-Format: application/pdf
Publication-Status: published as Yeon-Koo Che & Kathryn E. Spier, 2008. "Strategic judgment proofing," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 926-948.
Abstract: A liquidity-constrained entrepreneur needs to raise capital to finance a business activity that may cause injuries to third parties -- the tort victims. Taking the level of borrowing as fixed, the entrepreneur finances the activity with senior (secured) debt in order to shield assets from the tort victims in bankruptcy. Interestingly, senior debt serves the interests of society more broadly: it creates better incentives for the entrepreneur to take precautions than either junior debt or outside equity. Unfortunately, the entrepreneur will raise a socially excessive amount of senior debt. Giving tort victims priority over senior debtholders in bankruptcy prevents over-leveraging but leads to suboptimal incentives. Lender liability exacerbates the incentive problem even further. A Limited Seniority Rule, where the firm may issue senior debt up to an exogenous limit after which any further borrowing is treated as junior to the tort claim, dominates these alternatives. Shareholder liability, mandatory liability insurance and punitive damages are also discussed.
Handle: RePEc:nbr:nberwo:14183
Template-Type: ReDIF-Paper 1.0
Title: Endogenous information, menu costs and inflation persistence
Classification-JEL: D82; D83; E31; E52
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG ME
Number: 14184
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14184
File-URL: http://www.nber.org/papers/w14184.pdf
File-Format: application/pdf
Abstract: This paper develops a model where firms make state-dependent decisions on both pricing and acquisition of information. It is shown that when information is not perfect, menu costs combined with the aggregate price level serving as an endogenous public signal generate rigidity in price setting even when there is no real rigidity. Specifically, firms reveal their information to other firms by changing their prices. Because the cost of changing price is borne by a firm but the benefit from better information goes to other firms, firms have an incentive to postpone price changes until more information is revealed by other firms via the price level. The information externality and menu costs reinforce each other in delaying price adjustment. As a result, the response of inflation to nominal shocks is both sluggish and hump-shaped. The model can also qualitatively capture a number of stylized facts about price setting at the micro level and inflation at the macro level.
Handle: RePEc:nbr:nberwo:14184
Template-Type: ReDIF-Paper 1.0
Title: The Evolutionary Theory of Time Preferences and Intergenerational Transfers
Classification-JEL: J1
Author-Name: C.Y. Cyrus Chu
Author-Name: Hung-Ken Chien
Author-Name: Ronald D. Lee
Author-Person: ple147
Note: AG
Number: 14185
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14185
File-URL: http://www.nber.org/papers/w14185.pdf
File-Format: application/pdf
Publication-Status: published as Cyrus Chu, C.Y. & Chien, Hung-Ken & Lee, Ronald D., 2010. "The evolutionary theory of time preferences and intergenerational transfers," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 451-464, December.
Abstract: At each age an organism produces energy by foraging and allocates this energy among reproduction, survival, growth, and intergenerational transfers. We characterize the optimal set of allocation decisions that maximizes reproductive fitness. Time preference (the discount rate) is derived from the marginal rate of substitution between energy obtained at two different times or ages in an individual's life, holding reproductive fitness constant. We show that the life history may have an initial immature phase during which there is body growth but no fertility, and a later mature phase with fertility but no growth, as with humans. During the immature phase, time preference depends only on the compounding effect of body growth, much like returns on a capital investment, but not on fertility, or the intrinsic population growth rate. During the mature phase, time preference depends on the costliness of fertility, and on endogenous survival and intrinsic growth rate, and not at all on body growth. During the transition between the two phases, fertility, mortality, body growth, and intrinsic growth rate all matter. Using these results, we conclude that time preference and discount rates are likely to be U-shaped across age. We compare our results to Hansson and Stuart (1990), Rogers (1994, 1997) and Sozou and Seymour (2003). Wastage and inefficiencies aside, in a single sex model a system of intergenerational transfers yields Samuelson's (1958) biological interest rate equal to the population growth rate. When the rate of time preference exceeds this biological rate, inter- generational transfers will raise fitness and evolve through natural selection, partially smoothing out the age variations in time preference.
Handle: RePEc:nbr:nberwo:14185
Template-Type: ReDIF-Paper 1.0
Title: The Consequences of High School Exit Examinations for Struggling Low-Income Urban Students: Evidence from Massachusetts
Classification-JEL: I21
Author-Name: John P. Papay
Author-Name: Richard J. Murnane
Author-Person: pmu87
Author-Name: John B. Willett
Note: CH ED
Number: 14186
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14186
File-URL: http://www.nber.org/papers/w14186.pdf
File-Format: application/pdf
Publication-Status: published as February 11, 2010, doi: 10.3102/0162373709352530 EDUCATIONAL EVALUATION AND POLICY ANALYSIS March 2010 vol. 32 no. 1 5-23
Abstract: The growing prominence of high-stakes exit examinations has made questions about their effects on student outcomes increasingly important. We take advantage of a natural experiment to evaluate the causal effects of failing a high-stakes test on high school completion for the cohort scheduled to graduate from Massachusetts high schools in 2006. With these exit examinations, states divide a continuous performance measure into dichotomous categories, so students with essentially identical performance may have different outcomes. We find that, for low-income urban students on the margin of passing, failing the 10th grade mathematics examination reduces the probability of on-time graduation by eight percentage points. The large majority (89%) of students who fail the 10th grade mathematics examination retake it. However, although we find that low-income urban students are just as likely to retake the test as apparently equally skilled suburban students, they are much less likely to pass this retest. Furthermore, failing the 8th grade mathematics examination reduces by three percentage points the probability that low-income urban students stay in school through 10th grade. We find no effects for suburban students or wealthier urban students.
Handle: RePEc:nbr:nberwo:14186
Template-Type: ReDIF-Paper 1.0
Title: Do Buyouts (Still) Create Value?
Classification-JEL: G3; G34
Author-Name: Shourun Guo
Author-Name: Edie S. Hotchkiss
Author-Name: Weihong Song
Note: CF
Number: 14187
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14187
File-URL: http://www.nber.org/papers/w14187.pdf
File-Format: application/pdf
Publication-Status: published as Do Buyouts (Still) Create Value? SHOURUN GUO, EDITH S. HOTCHKISS, WEIHONG SONG* Article first published online: 21 MAR 2011 DOI: 10.1111/j.1540-6261.2010.01640.x © 2011 the American Finance Association Issue The Journal of Finance The Journal of Finance Volume 66, Issue 2, pages 479–517, April 2011
Abstract: This paper examines whether, and how, leveraged buyouts from the most recent wave of public to private transactions created value. For a sample of 192 buyouts completed between 1990 and 2006, we show that these deals are somewhat more conservatively priced and lower levered than their predecessors from the 1980s. For the subsample of deals with post-buyout data available, median market adjusted returns to pre- and post-buyout capital invested are 78% and 36%, respectively. In contrast, gains in operating performance are either comparable to or slightly exceed those observed for benchmark firms. We examine the relative contribution of several potential determinants of returns; in addition to gains in operating performance, returns are strongly related to increases in industry valuation multiples. Overall, our results provide insights into how transactions from the most recent wave of leveraged buyouts created value.
Handle: RePEc:nbr:nberwo:14187
Template-Type: ReDIF-Paper 1.0
Title: Immigration and National Wages: Clarifying the Theory and the Empirics
Classification-JEL: F22; J31; J61
Author-Name: Gianmarco I.P. Ottaviano
Author-Person: pot15
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 14188
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14188
File-URL: http://www.nber.org/papers/w14188.pdf
File-Format: application/pdf
Abstract: This paper estimates the effects of immigration on wages of native workers at the national U.S. level. Following Borjas (2003) we focus on national labor markets for workers of different skills and we enrich his methodology and refine previous estimates. We emphasize that a production function framework is needed to combine workers of different skills in order to evaluate the competition as well as cross-skill complementary effects of immigrants on wages. We also emphasize the importance (and estimate the value) of the elasticity of substitution between workers with at most a high school degree and those without one. Since the two groups turn out to be close substitutes, this strongly dilutes the effects of competition between immigrants and workers with no degree. We then estimate the substitutability between natives and immigrants and we find a small but significant degree of imperfect substitution which further decreases the competitive effect of immigrants. Finally, we account for the short run and long run adjustment of capital in response to immigration. Using our estimates and Census data we find that immigration (1990-2006) had small negative effects in the short run on native workers with no high school degree (-0.7%) and on average wages (-0.4%) while it had small positive effects on native workers with no high school degree (+0.3%) and on average native wages (+0.6%) in the long run. These results are perfectly in line with the estimated aggregate elasticities in the labor literature since Katz and Murphy (1992). We also find a wage effect of new immigrants on previous immigrants in the order of negative 6%.
Handle: RePEc:nbr:nberwo:14188
Template-Type: ReDIF-Paper 1.0
Title: Board Interlocks and the Propensity to be Targeted in Private Equity Transactions
Classification-JEL: G34
Author-Name: Toby Stuart
Author-Name: Soojin Yim
Note: CF
Number: 14189
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14189
File-URL: http://www.nber.org/papers/w14189.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 97, Issue 1, July 2010, Pages 174–189
Abstract: In this paper, we examine the propensity for U.S. public companies to become targets for private equity-backed, take-private transactions. We consider the characteristics of 483 private equity-backed deals in the 2000-2007 period relative to public companies, and find that, in addition to the financial drivers studied in previous works, board characteristics and director networks are also associated with deal generation. We find that a company that has a director who has had LBO experience through prior board service is ~40% more likely to receive a private equity offer, and that the strength of this effect varies with the influence of the director and the quality of the prior LBO experience. This effect is robust to the most likely alternative explanations and supports the idea that directors and social networks play an influential role in change-of-control transactions.
Handle: RePEc:nbr:nberwo:14189
Template-Type: ReDIF-Paper 1.0
Title: How Has the Euro Changed the Monetary Transmission?
Classification-JEL: C3; D2; E31; E4; E5; F4
Author-Name: Jean Boivin
Author-Person: pbo43
Author-Name: Marc P. Giannoni
Author-Person: pgi36
Author-Name: Benoît Mojon
Author-Person: pmo43
Note: EFG ME
Number: 14190
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14190
File-URL: http://www.nber.org/papers/w14190.pdf
File-Format: application/pdf
Publication-Status: published as How Has the Euro Changed the Monetary Transmission Mechanism?, Jean Boivin, Marc P. Giannoni, Benoît Mojon. in NBER Macroeconomics Annual 2008, Volume 23, Acemoglu, Rogoff, and Woodford. 2009
Abstract: This paper characterizes the transmission mechanism of monetary shocks across countries of the euro area, documents how this mechanism has changed with the introduction of the euro, and explores some potential explanations. The factor-augmented VAR (FAVAR) framework used is sufficiently rich to jointly model the euro area dynamics while permitting the transmission of shocks to be different across countries. We find important heterogeneity across countries in the effect of monetary shocks before the launch of the euro. In particular, we find that German interest-rate shocks triggered stronger responses of interest rates and consumption in some countries such as Italy and Spain than in Germany itself. According to our estimates, the creation of the euro has contributed 1) to a greater homogeneity of the transmission mechanism across countries, and 2) to an overall reduction in the effects of monetary shocks. Using a structural open-economy model, we argue that the combination of a change in the policy reaction function -- mainly toward a more aggressive response to inflation and output -- and the elimination of an exchange-rate risk can explain the evolution of the monetary transmission mechanism observed empirically.
Handle: RePEc:nbr:nberwo:14190
Template-Type: ReDIF-Paper 1.0
Title: Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?
Classification-JEL: E62; F41
Author-Name: Ethan Ilzetzki
Author-Person: pil21
Author-Name: Carlos A. Vegh
Author-Person: pve34
Note: IFM
Number: 14191
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14191
File-URL: http://www.nber.org/papers/w14191.pdf
File-Format: application/pdf
Abstract: A large empirical literature has found that fiscal policy in developing countries is procyclical, in contrast to high-income countries where it is countercyclical. The idea that fiscal policy in developing countries is procyclical has all but reached the status of conventional wisdom. This has sparked a growing theoretical literature that attempts to explain such a puzzle. Some authors, however, have suggested that procyclical fiscal policy could be more fiction than truth since, by and large, the current literature has ignored endogeneity problems and may have simply misidentified a standard expansionary effect of fiscal policy. To settle this issue of causality, we build a novel quarterly dataset for 49 countries covering the period 1960-2006, and subject the data to a battery of econometric tests: instrumental variables, simultaneous equations, and time-series methods. We find overwhelming evidence to support the idea that procyclical fiscal policy in developing countries is in fact truth and not fiction. We also find evidence that fiscal policy is expansionary -- a channel disregarded by the existing literature -- lending empirical support to the notion that when "it rains, it pours."
Handle: RePEc:nbr:nberwo:14191
Template-Type: ReDIF-Paper 1.0
Title: The Plight of Mixed Race Adolescents
Classification-JEL: J28
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Author-Name: Lisa Kahn
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: Jörg L. Spenkuch
Author-Person: psp102
Note: ED LS
Number: 14192
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14192
File-URL: http://www.nber.org/papers/w14192.pdf
File-Format: application/pdf
Publication-Status: published as Roland G. Fryer Jr. & Lisa Kahn & Steven D. Levitt & Jörg L. Spenkuch, 2012. "The Plight of Mixed-Race Adolescents," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 621-634, August.
Abstract: Over the past 40 years the fraction of mixed race black-white births has increased nearly nine-fold. There is little empirical evidence on how these children fare relative to their single-race counterparts. This paper describes basic facts about the plight of mixed race individuals during their adolescence and early adulthood. As one might expect, on a host of background and achievement characteristics, mixed race adolescents fall in between whites and blacks. When it comes to engaging in risky/anti-social adolescent behavior, however, mixed race adolescents are stark outliers compared to both blacks and whites. We argue that these behavioral patterns are most consistent with the "marginal man" hypothesis, which we formalize as a two-sector Roy model. Mixed race adolescents -- not having a natural peer group -- need to engage in more risky behaviors to be accepted. All other models we considered can explain neither why mixed race adolescents are outliers on risky behaviors nor why these behaviors are not strongly influenced by the racial composition at their school.
Handle: RePEc:nbr:nberwo:14192
Template-Type: ReDIF-Paper 1.0
Title: Housing Supply and Housing Bubbles
Classification-JEL: G12; R1; R31
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Albert Saiz
Author-Person: psa110
Note: PE
Number: 14193
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14193
File-URL: http://www.nber.org/papers/w14193.pdf
File-Format: application/pdf
Publication-Status: published as Glaeser, Edward L. & Gyourko, Joseph & Saiz, Albert, 2008. "Housing supply and housing bubbles," Journal of Urban Economics, Elsevier, vol. 64(2), pages 198-217, September.
Abstract: Like many other assets, housing prices are quite volatile relative to observable changes in fundamentals. If we are going to understand boom-bust housing cycles, we must incorporate housing supply. In this paper, we present a simple model of housing bubbles that predicts that places with more elastic housing supply have fewer and shorter bubbles, with smaller price increases. However, the welfare consequences of bubbles may actually be higher in more elastic places because those places will overbuild more in response to a bubble. The data show that the price run-ups of the 1980s were almost exclusively experienced in cities where housing supply is more inelastic. More elastic places had slightly larger increases in building during that period. Over the past five years, a modest number of more elastic places also experienced large price booms, but as the model suggests, these booms seem to have been quite short. Prices are already moving back towards construction costs in those areas.
Handle: RePEc:nbr:nberwo:14193
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Postsecondary Remediation Using a Regression Discontinuity Approach: Addressing Endogenous Sorting and Noncompliance
Classification-JEL: C1; I2; J24
Author-Name: Juan Carlos Calcagno
Author-Name: Bridget Terry Long
Author-Person: plo320
Note: ED
Number: 14194
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14194
File-URL: http://www.nber.org/papers/w14194.pdf
File-Format: application/pdf
Abstract: Remedial or developmental courses are the most common instruments used to assist postsecondary students who are not ready for college-level coursework. However, despite its important role in higher education and substantial costs, there is little rigorous evidence on the effectiveness of college remediation on the outcomes of students. This study uses a detailed dataset to identify the causal effect of remediation on the outcomes of nearly 100,000 college students in Florida. Using a Regression Discontinuity design, we provide causal estimates while also investigating possible endogenous sorting around the policy cutoff. The results suggest math and reading remedial courses have mixed benefits. Being assigned to remediation appears to increase persistence to the second year and the total number of credits completed for students on the margin of passing out of the requirement, but it does not increase the completion of college-level credits or eventual degree completion. Taken together, the results suggest that remediation might promote early persistence in college, but it does not necessarily help students on the margin of passing the placement cutoff make long-term progress toward earning a degree.
Handle: RePEc:nbr:nberwo:14194
Template-Type: ReDIF-Paper 1.0
Title: Which CEO Characteristics and Abilities Matter?
Classification-JEL: D21; D23; G24; G3
Author-Name: Steven N. Kaplan
Author-Name: Mark M. Klebanov
Author-Name: Morten Sorensen
Note: CF
Number: 14195
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14195
File-URL: http://www.nber.org/papers/w14195.pdf
File-Format: application/pdf
Publication-Status: published as STEVEN N. KAPLAN & MARK M. KLEBANOV & MORTEN SORENSEN, 2012. "Which CEO Characteristics and Abilities Matter?," The Journal of Finance, vol 67(3), pages 973-1007.
Abstract: We study the characteristics and abilities of CEO candidates for companies involved in buyout (LBO) and venture capital (VC) transactions and relate them to hiring decisions, investment decisions, and company performance. Candidates are assessed on more than thirty individual abilities. The abilities are highly correlated; a factor analysis suggests there are two primary factors with intuitive characterizations -- one for general ability and one that contrasts team-related, interpersonal skills with execution skills. Both LBO and VC firms are more likely to hire and invest in CEOs with greater general abilities, both execution- and team-related. Success, however, is more strongly related to execution skills than to team-related skills. Success is, at best, only marginally related to incumbency, holding observable talent and ability constant.
Handle: RePEc:nbr:nberwo:14195
Template-Type: ReDIF-Paper 1.0
Title: Air Pollution and Infant Health: Lessons from New Jersey
Classification-JEL: I12; Q53
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Matthew J. Neidell
Author-Person: pne362
Author-Name: Johannes Schmieder
Note: CH EEE EH PE
Number: 14196
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14196
File-URL: http://www.nber.org/papers/w14196.pdf
File-Format: application/pdf
Publication-Status: published as Currie, Janet & Neidell, Matthew & Schmieder, Johannes F., 2009. "Air pollution and infant health: Lessons from New Jersey," Journal of Health Economics, Elsevier, vol. 28(3), pages 688-703, May.
Abstract: We examine the impact of three "criteria" air pollutants on infant health in New Jersey in the 1990s by combining information about mother's residential location from birth certificates with information from air quality monitors. In addition to large sample size, our work offers three important innovations: First, because we know the exact addresses of mothers, we select those mothers closest to air monitors to ensure a more accurate measure of air quality. Second, since we follow mothers over time, we control for unobserved characteristics of mothers using maternal fixed effects. Third, we examine interactions of air pollution with smoking and other predictors of poor infant health outcomes. We find consistently negative effects of exposure to pollution, especially carbon monoxide, both during and after birth. The effects are considerably larger for smokers than for nonsmokers as well as for older mothers. Since automobiles are the main source of carbon monoxide emissions, our results have important implications for regulation of automobile emissions.
Handle: RePEc:nbr:nberwo:14196
Template-Type: ReDIF-Paper 1.0
Title: Environmental Taxes
Classification-JEL: H23; Q28
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Andrew Leicester
Author-Person: ple570
Author-Name: Stephen Smith
Author-Person: psm71
Note: EEE PE
Number: 14197
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14197
File-URL: http://www.nber.org/papers/w14197.pdf
File-Format: application/pdf
Publication-Status: published as Don Fullerton, Andrew Leicester, and Stephen Smith. "Environmental Taxes" Dimensions of Tax Design. Ed. Institute for Fiscal Studies (IFS). Oxford: Oxford University Press, 2010.
Abstract: This chapter provides an overview of key economic issues in the use of taxation as an instrument of environmental policy in the UK. It first reviews economic arguments for using taxes and other market mechanisms in environmental policy, discusses the choice of tax base, and considers the value of the revenue from environmental taxes. It is argued that environmental tax revenues do not significantly alter economic constraints on tax policy, and that environmental taxes need to be justified primarily by the cost-effective achievement of environmental goals. The chapter then assesses key areas where environmental taxes appear to have significant potential -- including taxes on energy used by industry and households, road transport, aviation, and waste. In some of these areas, efficient environmental tax design needs to make use of a number of taxes in combination -- a "multi-part instrument".
Handle: RePEc:nbr:nberwo:14197
Template-Type: ReDIF-Paper 1.0
Title: Powerful Women: Does Exposure Reduce Bias?
Classification-JEL: O1
Author-Name: Lori A. Beaman
Author-Person: pbe525
Author-Name: Raghabendra Chattopadhyay
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Rohini Pande
Author-Person: ppa900
Author-Name: Petia Topalova
Note: POL
Number: 14198
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14198
File-URL: http://www.nber.org/papers/w14198.pdf
File-Format: application/pdf
Publication-Status: published as Lori Beaman & Raghabendra Chattopadhyay & Esther Duflo & Rohini Pande & Petia Topalova, 2009. "Powerful Women: Does Exposure Reduce Bias?," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1497-1540, November.
Abstract: We exploit random assignment of gender quotas across Indian village councils to investigate whether having a female chief councillor affects public opinion towards female leaders. Villagers who have never been required to have a female leader prefer male leaders and perceive hypothetical female leaders as less effective than their male counterparts, when stated performance is identical. Exposure to a female leader does not alter villagers' taste preference for male leaders. However, it weakens stereotypes about gender roles in the public and domestic spheres and eliminates the negative bias in how female leaders' effectiveness is perceived among male villagers. Female villagers exhibit less prior bias, but are also less likely to know about or participate in local politics; as a result, their attitudes are largely unaffected. Consistent with our experimental findings, villagers rate their women leaders as less effective when exposed to them for the first, but not second, time. These changes in attitude are electorally meaningful: after 10 years of the quota policy, women are more likely to stand for and win free seats in villages that have been continuously required to have a female chief councillor.
Handle: RePEc:nbr:nberwo:14198
Template-Type: ReDIF-Paper 1.0
Title: Assessing the Anticompetitive Effects of Multiproduct Pricing
Classification-JEL: L4
Author-Name: Dennis W. Carlton
Author-Person: pca14
Author-Name: Patrick Greenlee
Author-Name: Michael Waldman
Author-Person: pwa40
Note: IO
Number: 14199
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14199
File-URL: http://www.nber.org/papers/w14199.pdf
File-Format: application/pdf
Abstract: In response to the "standardless" approach used in LePage's v. 3M, the Antitrust Modernization Commission (AMC) and others advocate using a discount allocation approach to assess whether bundled loyalty discounts violate Section 2 of the Sherman Act. This approach treats loyalty discounts like predatory pricing. The analogy to predatory pricing is flawed. We propose an alternative approach that focuses on the presence of significant scale economies. We use our approach to analyze LePage's, as well as the recent PeaceHealth decision.
Handle: RePEc:nbr:nberwo:14199
Template-Type: ReDIF-Paper 1.0
Title: Frequency of Price Adjustment and Pass-through
Classification-JEL: E3; E31; F41
Author-Name: Gita Gopinath
Author-Name: Oleg Itskhoki
Author-Person: pit14
Note: EFG IFM ME
Number: 14200
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14200
File-URL: http://www.nber.org/papers/w14200.pdf
File-Format: application/pdf
Publication-Status: published as Gita Gopinath & Oleg Itskhoki, 2010. "Frequency of Price Adjustment and Pass-Through," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 675-727, May.
Abstract: A common finding across empirical studies of price adjustment is that there is large heterogeneity in the frequency of price adjustment. However, there is little evidence of how distant prices are from the desired flexible price. Without this evidence, it is difficult to discern what the frequency measure implies for the transmission of shocks or to understand why some firms adjust more frequently than others. We exploit the open economy environment, which provides a well-identified and sizeable cost shock namely the exchange rate shock to shed light on these questions. First, we empirically document that high frequency adjusters have a long-run pass-through that is at least twice as high as low frequency adjusters in the data. Next, we show theoretically that long-run pass-through is determined by the same primitives that shape the curvature of the profit function and, hence, also affect frequency. In an environment with variable mark-ups or variable marginal costs, theory predicts a positive relation between frequency and pass-through, as documented in the data. Consequently, estimates of long-run pass-through shed light on the determinants of the duration of prices. The standard workhorse model with constant elasticity of demand and Calvo or state dependent pricing generates long-run pass-through that is uncorrelated with frequency, contrary to the data. Lastly, we calibrate a dynamic menu-cost model and show that variable mark-ups chosen to match the variation in pass-through in the data can generate substantial variation in price duration, equivalent to one third of the observed variation in the data.
Handle: RePEc:nbr:nberwo:14200
Template-Type: ReDIF-Paper 1.0
Title: Neighbors And Co-Workers: The Importance Of Residential Labor Market Networks
Classification-JEL: J15; J61
Author-Name: Judith K. Hellerstein
Author-Person: phe270
Author-Name: Melissa McInerney
Author-Person: pmc308
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 14201
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14201
File-URL: http://www.nber.org/papers/w14201.pdf
File-Format: application/pdf
Publication-Status: published as Judith K. Hellerstein & Melissa McInerney & David Neumark, 2011. "Neighbors and Coworkers: The Importance of Residential Labor Market Networks," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 659 - 695.
Abstract: We specify and implement a test for the presence and importance of labor market network based on residential proximity in determining the establishments at which people work. Using matched employer-employee data at the establishment level, we measure the importance of these network effects for groups broken out by race, ethnicity, and various measures of skill. The evidence indicates that these types of labor market networks do exist and play an important role in determining the establishments where workers work, that they are more important for minorities and the less-skilled, especially among Hispanics, and that these networks appear to be race-based.
Handle: RePEc:nbr:nberwo:14201
Template-Type: ReDIF-Paper 1.0
Title: Do Women Pay More for Credit? Evidence from Italy
Classification-JEL: G21; J16; J71
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Francesca Lotti
Author-Person: plo19
Author-Name: Paolo Emilio Mistrulli
Author-Person: pmi318
Note: CF LS POL
Number: 14202
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14202
File-URL: http://www.nber.org/papers/w14202.pdf
File-Format: application/pdf
Publication-Status: published as Alberto F. Alesina & Francesca Lotti & Paolo Emilio Mistrulli, 2013. "Do Women Pay More For Credit? Evidence From Italy," Journal of the European Economic Association, European Economic Association, vol. 11, pages 45-66, 01.
Abstract: The answer is yes. By using a unique and large data set on overdraft contracts between banks and microfirms and self-employed individuals, we find robust evidence that women in Italy pay more for overdraft facilities than men. We could not find any evidence that women are riskier then men. The male/female differential remains even after controlling for a large number of characteristics of the type of business, the borrower and the market structure of the credit market. The result is not driven by women using a different type of bank than men, since the same bank charges different rates to male and female borrowers. Social capital does play a role: high levels of trust loosen credit conditions by lowering interest rates, but this benefit is not evenly distributed, as women benefit from increased social capital less than men.
Handle: RePEc:nbr:nberwo:14202
Template-Type: ReDIF-Paper 1.0
Title: The Wage Gap between Francophones and Anglophones: A Canadian Perspective, 1970 to 2000
Classification-JEL: J2; J7; R23
Author-Name: David Albouy
Author-Person: pal128
Note: LS
Number: 14203
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14203
File-URL: http://www.nber.org/papers/w14203.pdf
File-Format: application/pdf
Publication-Status: published as Albouy, David Y. "The Wage Gap between Francophones and Anglophones: A Canadian Perspective, 1970 to 2000" Canadian Journal of Economics, Vol. 41, No. 4, November 2008, pp. 1211-1238.
Publication-Status: published as David Albouy, 2008. "The wage gap between Francophones and Anglophones: a Canadian perspective, 1970–2000," Canadian Journal of Economics/Revue canadienne d'économique, vol 41(4), pages 1211-1238.
Abstract: The wage differential between Francophone and Anglophone men from 1970 to 2000 fell by 25 percentage points within Quebec, but only by 10 points Canada-wide, largely because the wages of Quebec Anglophones fell by 15 points relative to other Canadian Anglophones. Accordingly, the Canadian measure of the Francophone wage gap better reflects the changing welfare of Francophones than the Quebec measure. Over half of the reduction in the Canadian Francophone wage gap is explained by rising Francophone education levels. In Quebec, the declining number and relative wages of Anglophone workers is best explained by a falling demand for English-speaking labour.
Handle: RePEc:nbr:nberwo:14203
Template-Type: ReDIF-Paper 1.0
Title: Housing Wealth Isn't Wealth
Classification-JEL: E2; E21; E22; E3; E32; E37; G1
Author-Name: Willem H. Buiter
Author-Person: pbu137
Note: IFM ME
Number: 14204
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14204
File-URL: http://www.nber.org/papers/w14204.pdf
File-Format: application/pdf
Publication-Status: published as Buiter, Willem H., 2010. "Housing wealth isn't wealth," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 4(22), pages 1-29.
Abstract: A fall in house prices due to a change in fundamental value redistributes wealth from those long housing (for whom the fundamental value of the house they own exceeds the present discounted value of their planned future consumption of housing services) to those short housing. In a representative agent model and in the Yaari-Blanchard OLG model used in the paper, there is no pure wealth effect on consumption from a change in house prices if this represents a change in fundamental value. There is a pure wealth effect on consumption from a change in house prices if this reflects a change in the speculative bubble component of house prices. Two other channels through which house prices can affect aggregate consumption are (1) redistribution effects if the marginal propensity to spend out of wealth differs between those long housing and those short housing and (2) collateral or credit effects due to the collateralisability of housing wealth and the non-collateralisability of human wealth. A decline in house prices reduces the scope for mortgage equity withdrawal. For given sequences of future after-tax labour income and interest rates, this may depress consumption in the short run while boosting it in the long run.
Handle: RePEc:nbr:nberwo:14204
Template-Type: ReDIF-Paper 1.0
Title: Real Effects of the Subprime Mortgage Crisis: Is it a Demand or a Finance Shock?
Classification-JEL: G1; G3
Author-Name: Hui Tong
Author-Person: pto159
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: CF IFM
Number: 14205
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14205
File-URL: http://www.nber.org/papers/w14205.pdf
File-Format: application/pdf
Publication-Status: published as Hui Tong & Shang-Jin Wei, 2008. "Real Effects of the Subprime Mortgage Crisis: Is it a Demand or a Finance Shock?," IMF Working Papers, vol 08(186).
Abstract: We develop a methodology to study whether and how a financial-sector crisis can spill over to the real economy, and apply it to the case of the ongoing subprime mortgage crisis. If there is a spillover, does it manifest itself primarily by reducing consumer confidence and consumer demand? Is there also a supply-side channel through a tightened liquidity constraint faced by non-financial firms? Since most firms appear to have much larger cash holdings than in the past, some suggest that a liquidity constraint is not likely to be a significant factor for non-financial firms. We propose a methodology to estimate the importance of these two channels for spillovers. We first propose an index of a firm's sensitivity to a shock to consumer confidence, based on its response to the 9/11 shock in 2001. We then construct a separate firm-level index on financial constraint based on Whited and Wu (2006). As a robustness check, we also construct an alternative sector-level index of a firm's intrinsic demand for external finance, based on the work of Rajan and Zingales (1998). We find robust evidence suggesting that both channels are at work, but that a tightened liquidity squeeze appears to be economically more important than reduced consumer confidence or spending in explaining cross-firm differences in stock price declines.
Handle: RePEc:nbr:nberwo:14205
Template-Type: ReDIF-Paper 1.0
Title: The Persuasive Effects of Direct Mail: A Regression Discontinuity Approach
Classification-JEL: D70
Author-Name: Alan Gerber
Author-Name: Daniel Kessler
Author-Name: Marc Meredith
Note: PE POL
Number: 14206
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14206
File-URL: http://www.nber.org/papers/w14206.pdf
File-Format: application/pdf
Publication-Status: published as Alan S. Gerber & Daniel P. Kessler & Marc Meredith, 2011. "The Persuasive Effects of Direct Mail: A Regression Discontinuity Based Approach," The Journal of Politics, vol 73(1), pages 140-155.
Abstract: During the contest for Kansas attorney general in 2006, an organization sent out 6 pieces of mail criticizing the incumbent's conduct in office. We exploit a discontinuity in the rule used to select which households received the mailings to identify the causal effect of mail on vote choice and voter turnout. We find these mailings had both a statistically and politically significant effect on the challenger's vote share. Our estimates suggest that a ten percentage point increase in the amount of mail sent to a precinct increased the challenger's vote share by approximately three percentage points. Furthermore, our results suggest that the mechanism for this increase was persuasion rather than mobilization.
Handle: RePEc:nbr:nberwo:14206
Template-Type: ReDIF-Paper 1.0
Title: Leveraged Buyouts and Private Equity
Classification-JEL: G3; G34
Author-Name: Steven N. Kaplan
Author-Name: Per Strömberg
Author-Person: pst18
Note: CF
Number: 14207
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14207
File-URL: http://www.nber.org/papers/w14207.pdf
File-Format: application/pdf
Publication-Status: published as Steven N. Kaplan & Per Stromberg, 2009. "Leveraged Buyouts and Private Equity," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 121-46, Winter.
Abstract: We describe and present time series evidence on the leveraged buyout / private equity industry, both firms and transactions. We discuss the existing empirical evidence on the economics of the firms and transactions. We consider similarities and differences between the recent private equity wave and the wave of the 1980s. Finally, we speculate on what the evidence implies for the future of private equity.
Handle: RePEc:nbr:nberwo:14207
Template-Type: ReDIF-Paper 1.0
Title: Labor Supply: Are the Income and Substitution Effects Both Large or Both Small?
Classification-JEL: C42; E24; J22
Author-Name: Miles S. Kimball
Author-Person: pki97
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Note: EFG LS ME
Number: 14208
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14208
File-URL: http://www.nber.org/papers/w14208.pdf
File-Format: application/pdf
Abstract: Labor supply is unresponsive to permanent changes in wage rates. Thus, income and substitution effects cancel, but are they both close to zero or both large? This paper develops a theory of labor supply where income and substitution effects cancel, taking into account optimization over time, fixed costs of going to work, and interactions of labor supply decisions within the household. The paper then applies this theory to survey evidence on the response of labor supply to a large wealth shock. The evidence implies that the constant marginal utility of wealth (Frisch) elasticity of labor supply is about one.
Handle: RePEc:nbr:nberwo:14208
Template-Type: ReDIF-Paper 1.0
Title: Information, Avoidance Behavior, and Health: The Effect of Ozone on Asthma Hospitalizations
Classification-JEL: D80; I12; I18; Q53
Author-Name: Matthew J. Neidell
Author-Person: pne362
Note: CH EEE EH
Number: 14209
Creation-Date: 2008-07
Order-URL: http://www.nber.org/papers/w14209
File-URL: http://www.nber.org/papers/w14209.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Neidell, 2009. "Information, Avoidance Behavior, and Health: The Effect of Ozone on Asthma Hospitalizations," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
Abstract: This paper assesses whether responses to information about risk impact estimates of the relationship between ozone and asthma in Southern California. Using a regression discontinuity design, I find smog alerts significantly reduces daily attendance at two major outdoor facilities. Using daily time-series regression models that include year-month and small area fixed effects, I find estimates of the effect of ozone for children and the elderly that include information are significantly larger than estimates that do not. These results are consistent with the hypothesis that individuals take substantial action to reduce exposure to risk; estimates ignoring these actions are severely biased.
Handle: RePEc:nbr:nberwo:14209
Template-Type: ReDIF-Paper 1.0
Title: Long Term Insurance (LTI) for Addressing Catastrophe Risk
Classification-JEL: G1; G2; G22
Author-Name: Dwight Jaffee
Author-Name: Howard Kunreuther
Author-Name: Erwann Michel-Kerjan
Author-Person: pmi64
Note: PE
Number: 14210
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14210
File-URL: http://www.nber.org/papers/w14210.pdf
File-Format: application/pdf
Abstract: This paper proposes long-term insurance (LTI) as an alternative to the standard annual homeowners policy using lessons from the mortgage market as a benchmark. LTI has the potential to significantly increase social welfare by reducing insurers' administrative costs, lowering search costs and uncertainty for consumers and providing incentives for long-term investment in mitigation measures to protect property. A two-period model illustrates situations that would make a long-term contract attractive to both insurers and consumers under competitive market conditions.
Handle: RePEc:nbr:nberwo:14210
Template-Type: ReDIF-Paper 1.0
Title: Harming the Best: How Schools Affect the Black-White Achievement Gap
Classification-JEL: H4; I2; I28; J18
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Steven G. Rivkin
Author-Person: pri265
Note: CH ED LS PE
Number: 14211
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14211
File-URL: http://www.nber.org/papers/w14211.pdf
File-Format: application/pdf
Publication-Status: published as Eric A. Hanushek & Steven G. Rivkin, 2009. "Harming the best: How schools affect the black-white achievement gap," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(3), pages 366-393.
Abstract: Sizeable achievement differences by race appear in early grades, but substantial uncertainty exists about the impact of school quality on the black-white achievement gap and particularly about its evolution across different parts of the achievement distribution. Texas administrative data show that the overall growth in the achievement gap between third and eighth grade is higher for students with higher initial achievement and that specific teacher and peer characteristics including teacher experience and peer racial composition explain a substantial share of the widening. The adverse effect of attending school with a high black enrollment share appears to be an important contributor to the larger growth in the achievement differential in the upper part of the test score distribution. This evidence reaffirms the major role played by peers and school quality, but also presents a policy dilemma. Teacher labor market complications, current housing patterns, legal limits in segregation efforts, and uncertainty about the overall effects of specific desegregation programs indicate that effective policy responses will almost certainly involve a set of school improvements beyond simple changes in peer racial composition and the teacher experience distribution.
Handle: RePEc:nbr:nberwo:14211
Template-Type: ReDIF-Paper 1.0
Title: Organizational Fragmentation and Care Quality in the U.S. Health Care System
Classification-JEL: D2; I11; I12; I18
Author-Name: Randall D. Cebul
Author-Name: James B. Rebitzer
Author-Person: pre77
Author-Name: Lowell J. Taylor
Author-Person: pta912
Author-Name: Mark Votruba
Note: EH LS
Number: 14212
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14212
File-URL: http://www.nber.org/papers/w14212.pdf
File-Format: application/pdf
Publication-Status: published as Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 93-113, Fall.
Abstract: Many goods and services can be readily provided through a series of unconnected transactions, but in health care close coordination over time and within care episodes improves both health outcomes and efficiency. Close coordination is problematic in the US health care system because the financing and delivery of care is distributed across a variety of distinct and often competing entities, each with its own objectives, obligations and capabilities. These fragmented organizational structures lead to disrupted relationships, poor information flows, and misaligned incentives that combine to degrade care quality and increase costs. We illustrate our argument with examples taken from the insurance and the hospital industries, and discuss possible responses to the problems resulting from organizational fragmentation.
Handle: RePEc:nbr:nberwo:14212
Template-Type: ReDIF-Paper 1.0
Title: Trends in the Black-White Achievement Gap:Clarifying the Meaning of Within- and Between-School Achievement Gaps
Classification-JEL: I2; I21
Author-Name: Lindsay C. Page
Author-Name: Richard J. Murnane
Author-Person: pmu87
Author-Name: John B. Willett
Note: ED
Number: 14213
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14213
File-URL: http://www.nber.org/papers/w14213.pdf
File-Format: application/pdf
Abstract: We decompose black-white achievement gap trends between 1971 and 2004 into trends in within- and between-school differences. We show that the previous finding that narrowing within-school inequality explains most of the decline in the black-white achievement gap between 1971 and 1988 is sensitive to methodology. Employing a more detailed partition of achievement differences, we estimate that 40 percent of the narrowing of the gap through the 1970s and 1980s is attributable to the narrowing of within-school differences between black and white students. Further, the consequences for achievement of attending a high minority school became increasingly deleterious between 1971 and 1999.
Handle: RePEc:nbr:nberwo:14213
Template-Type: ReDIF-Paper 1.0
Title: Market Penetration Costs and the New Consumers Margin in International Trade
Classification-JEL: F12; F15; L11; M3
Author-Name: Costas Arkolakis
Author-Person: par274
Note: ITI
Number: 14214
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14214
File-URL: http://www.nber.org/papers/w14214.pdf
File-Format: application/pdf
Publication-Status: published as Costas Arkolakis, 2010. "Market Penetration Costs and the New Consumers Margin in International Trade," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1151 - 1199.
Abstract: I develop a new theory of marketing costs and introduce it into a model of trade with product differentiation and firm productivity heterogeneity. In this model, a firm enters a market if it makes profits by reaching a single consumer there and pays an increasing marginal cost to access additional consumers. This market penetration cost introduces an extensive margin of new consumers in firms' sales. I calibrate the key parameters of the model to match data on French firms from Eaton, Kortum and Kramarz, in particular the higher sales in France of firms that choose to export to more destinations. The model predicts that most firms do not export, and that a large proportion of firms that export in particular markets do so in small amounts. These predictions are in line with the French data, but together create a puzzle for models with a fixed cost of exporting, such as those of Melitz and Chaney. Looking at the comparative statics of trade liberalization, I find that the model predicts large increases in trade in goods with positive but little previous trade, in line with Kehoe and Ruhl. The model implies that these increases can contribute to new trade significantly more than the corresponding increases due to new exporters.
Handle: RePEc:nbr:nberwo:14214
Template-Type: ReDIF-Paper 1.0
Title: What's News in Business Cycles
Classification-JEL: C11; C51; E13; E32
Author-Name: Stephanie Schmitt-Grohe
Author-Person: psc44
Author-Name: Martin Uribe
Note: EFG
Number: 14215
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14215
File-URL: http://www.nber.org/papers/w14215.pdf
File-Format: application/pdf
Publication-Status: published as What's News in Business Cycles by Stephanie Schmitt-Grohe and Martin Uribe, Econometrica 80, November 2012, 2733-2764.
Abstract: In this paper, we perform a structural Bayesian estimation of the contribution of anticipated shocks to business cycles in the postwar United States. Our theoretical framework is a real-business-cycle model augmented with four real rigidities: investment adjustment costs, variable capacity utilization, habit formation in consumption, and habit formation in leisure. Business cycles are assumed to be driven by permanent and stationary neutral productivity shocks, permanent investment-specific shocks, and government spending shocks. Each of these shocks is buffeted by four types of structural innovations: unanticipated innovations and innovations anticipated one, two, and three quarters in advance. We find that anticipated shocks account for more than two thirds of predicted aggregate fluctuations. This result is robust to estimating a variant of the model featuring a parametric wealth elasticity of labor supply.
Handle: RePEc:nbr:nberwo:14215
Template-Type: ReDIF-Paper 1.0
Title: Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro-Data from Four European Countries
Classification-JEL: D2; J23; L1; O31; O33
Author-Name: Rupert Harrison
Author-Name: Jordi Jaumandreu
Author-Person: pja133
Author-Name: Jacques Mairesse
Author-Person: pma712
Author-Name: Bettina Peters
Author-Person: ppe99
Note: LS PR
Number: 14216
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14216
File-URL: http://www.nber.org/papers/w14216.pdf
File-Format: application/pdf
Publication-Status: published as Harrison, Rupert & Jaumandreu, Jordi & Mairesse, Jacques & Peters, Bettina, 2014. "Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 35(C), pages 29-43.
Abstract: This paper studies the impact of process and product innovations introduced by firms on employment growth in these firms. A simple model that relates employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products is developed and estimated using comparable firm-level data from France, Germany, Spain and the UK. Results show that displacement effects induced by productivity growth in the production of old products are large, while those associated with process innovations, which are likely to be compensated by price decreases, appear to be small. The effects related to product innovations are, however, strong enough to overcompensate these displacement effects.
Handle: RePEc:nbr:nberwo:14216
Template-Type: ReDIF-Paper 1.0
Title: Financial Stability, the Trilemma, and International Reserves
Classification-JEL: E44; E58; F21; F31; F36; F41; N10; O24
Author-Name: Maurice Obstfeld
Author-Person: pob13
Author-Name: Jay C. Shambaugh
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: IFM
Number: 14217
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14217
File-URL: http://www.nber.org/papers/w14217.pdf
File-Format: application/pdf
Publication-Status: published as Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2010. "Financial Stability, the Trilemma, and International Reserves," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 57-94, April.
Abstract: The rapid growth of international reserves---a development concentrated in the emerging markets---remains a puzzle. In this paper we suggest that a model based on financial stability and financial openness goes far toward explaining reserve holdings in the modern era of globalized capital markets. The size of domestic financial liabilities that could potentially be converted into foreign currency (M2), financial openness, the ability to access foreign currency through debt markets, and exchange rate policy are all significant predictors of reserve stocks. Our empirical financial-stability model seems to outperform both traditional models and recent explanations based on external short-term debt.
Handle: RePEc:nbr:nberwo:14217
Template-Type: ReDIF-Paper 1.0
Title: Securities Laws, Disclosure, and National Capital Markets in the Age of Financial Globalization
Classification-JEL: F30; F36; G10; G15; G32
Author-Name: René M. Stulz
Note: CF
Number: 14218
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14218
File-URL: http://www.nber.org/papers/w14218.pdf
File-Format: application/pdf
Publication-Status: published as René M. Stulz, 2009. "Securities Laws, Disclosure, and National Capital Markets in the Age of Financial Globalization," Journal of Accounting Research, Blackwell Publishing, vol. 47(2), pages 349-390, 05.
Abstract: As barriers to international investment fall and technology improves, the cost advantages for a firm's securities to trade publicly in the country in which that firm is located and for that country to have a market for publicly traded securities distinct from the capital markets of other countries will progressively disappear. However, securities laws remain an important determinant of whether and where securities are issued, how they are valued, who owns them, and where they trade. The value of public firms depends on these laws, so that identical firms subject to different laws are likely to have different values. We show that mandatory disclosure through securities laws can decrease agency costs between corporate insiders and minority shareholders, but only provided the investors can act on the information disclosed and the laws cannot be weakened ex post too much through lobbying by corporate insiders. With financial globalization, national disclosure laws can have wide-ranging effects on a country's welfare, on firms and on investor portfolios, including the extent to which share holdings reveal a home bias. In equilibrium, if firms can choose the securities laws they are subject to when they go public, some firms will choose stronger securities laws than those of the country in which they are located and some firms will do the opposite. These effects of securities laws can be expected to become smaller if differences in national laws and their enforcement decrease and if the costs of private solutions to manage corporate agency conflicts that are substitutes for securities laws fall.
Handle: RePEc:nbr:nberwo:14218
Template-Type: ReDIF-Paper 1.0
Title: The Burden of the Nondiversifiable Risk of Entrepreneurship
Classification-JEL: G12; G24; G32; H1; L14
Author-Name: Robert E. Hall
Author-Name: Susan E. Woodward
Note: EFG ME
Number: 14219
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14219
File-URL: http://www.nber.org/papers/w14219.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Hall & Susan E. Woodward, 2010. "The Burden of the Nondiversifiable Risk of Entrepreneurship," American Economic Review, American Economic Association, vol. 100(3), pages 1163-94, June.
Abstract: In the standard venture capital contract, entrepreneurs have a large fraction of equity ownership in the companies they found and are paid a sub-market salary by the investors who provide the money to develop the idea. The big rewards come only to those whose companies go public or are acquired on favorable terms, forcing entrepreneurs to bear a substantial burden of idiosyncratic risk. We study this burden in the case of high-tech companies funded by venture capital. Over the past 20 years, the typical venture-backed entrepreneur earned an average of $4.4 million from companies that succeeded in attracting venture funding. Entrepreneurs with a coefficient of relative risk aversion of two and with less than $0.7 million would be better off in a salaried position than in a startup, despite the prospect of an average personal payoff of $4.4 million and the possibility of payoffs over $1 billion. We conclude that startups attract entrepreneurs with lower risk aversion, higher initial assets, preferences for entrepreneurship over employment, and optimistic beliefs about the payoffs from their products.
Handle: RePEc:nbr:nberwo:14219
Template-Type: ReDIF-Paper 1.0
Title: Happiness Inequality in the United States
Classification-JEL: D3; D63; I3; J1; Y1
Author-Name: Betsey Stevenson
Author-Person: pst145
Author-Name: Justin Wolfers
Author-Person: pwo9
Note: LE LS PE
Number: 14220
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14220
File-URL: http://www.nber.org/papers/w14220.pdf
File-Format: application/pdf
Publication-Status: published as Betsey Stevenson & Justin Wolfers, 2008. "Happiness Inequality in the United States," Journal of Legal Studies, University of Chicago Press, vol. 37(S2), pages S33-S79, 06.
Abstract: This paper examines how the level and dispersion of self-reported happiness has evolved over the period 1972-2006. While there has been no increase in aggregate happiness, inequality in happiness has fallen substantially since the 1970s. There have been large changes in the level of happiness across groups: Two-thirds of the black-white happiness gap has been eroded, and the gender happiness gap has disappeared entirely. Paralleling changes in the income distribution, differences in happiness by education have widened substantially. We develop an integrated approach to measuring inequality and decomposing changes in the distribution of happiness, finding a pervasive decline in within-group inequality during the 1970s and 1980s that was experienced by even narrowly-defined demographic groups. Around one-third of this decline has subsequently been unwound. Juxtaposing these changes with large rises in income inequality suggests an important role for non-pecuniary factors in shaping the well-being distribution.
Handle: RePEc:nbr:nberwo:14220
Template-Type: ReDIF-Paper 1.0
Title: What's a Recession, Anyway?
Classification-JEL: E3; E32; E37
Author-Name: Edward E. Leamer
Author-Person: ple440
Note: EFG
Number: 14221
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14221
File-URL: http://www.nber.org/papers/w14221.pdf
File-Format: application/pdf
Abstract: Monthly US data on payroll employment, civilian employment, industrial production and the unemployment rate are used to define a recession-dating algorithm that nearly perfectly reproduces the NBER official peak and trough dates. The only substantial point of disagreement is with respect to the NBER November 1973 peak. The algorithm prefers September 1974. In addition, this algorithm indicates that the data through June 2008 do not yet exceed the recession threshold, and will do so only if things get much worse.
Handle: RePEc:nbr:nberwo:14221
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Needs in Economies with Interconnected Financial Obligations
Classification-JEL: D53; D85; G20
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: EFG ME
Number: 14222
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14222
File-URL: http://www.nber.org/papers/w14222.pdf
File-Format: application/pdf
Publication-Status: published as Rotemberg, Julio J. "Minimal Settlement Assets in Economies with Interconnected Financial Obligations." Journal of Money, Credit & Banking 43, no. 1 (February 2011): 81–108.
Abstract: A model is developed where firms in a financial system have to settle their debts to each other by using a liquid asset. The question that is studied is how many firms must obtain how much of this asset from outside the financial system to make sure that all debts within the system are settled. The main result is that these liquidity needs are larger when these firms are more interconnected through their debts, i.e. when they borrow from and lend to more firms. Two pecuniary externalities are discussed. One involves the choice of paying one creditor first rather than another. The second involves the extent to which firms borrow and acquire claims on other firms with the proceeds. When a group of firms raises their involvement in this activity, firms outside the group may face more difficulties in settling their debts.
Handle: RePEc:nbr:nberwo:14222
Template-Type: ReDIF-Paper 1.0
Title: Daily Monetary Policy Shocks and the Delayed Response of New Home Sales
Classification-JEL: E44; E52
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EFG ME
Number: 14223
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14223
File-URL: http://www.nber.org/papers/w14223.pdf
File-Format: application/pdf
Publication-Status: published as Hamilton, James D., 2008. "Daily monetary policy shocks and new home sales," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1171-1190, October.
Abstract: This paper offers an explication of the hump-shaped response of real economic activity to changes in monetary policy, focusing on the particular channel operating through new home sales. I suggest that the conventional notion of a monetary policy shock as a surprise change in the fed funds rate is misspecified. The primary news for market participants is not what the Fed just did, but is instead new information about what the Fed is going to do in the near future. Revisions in these anticipations show up instantaneously in long-term mortgage rates. Although mortgage rates respond well before the Fed actually changes its target rate, home sales do not respond until much later. The paper attributes this delay to cross-sectional heterogeneity in search times. This framework offers a description of the lags in the effects of monetary policy that is both more detailed, allowing us in principle to measure the consequences at the daily frequency, and more believable than traditional measures.
Handle: RePEc:nbr:nberwo:14223
Template-Type: ReDIF-Paper 1.0
Title: Why the DEA STRIDE Data are Still Useful for Understanding Drug Markets
Classification-JEL: H3; I18; K42
Author-Name: Jeremy Arkes
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Author-Name: Susan M. Paddock
Author-Name: Jonathan P. Caulkins
Author-Name: Peter Reuter
Note: EH
Number: 14224
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14224
File-URL: http://www.nber.org/papers/w14224.pdf
File-Format: application/pdf
Abstract: In 2001, use of the STRIDE data base for the purposes of analyzing drug prices and the impact of public policies on drug markets came under serious attack by the National Research Council (Manski et al., 2001; Horowitz, 2001). While some of the criticisms raised by the committee were valid, many of the concerns can be easily addressed through more careful use of the data. In this paper, we first disprove Horowitz's main argument that prices are different for observations collected by different agencies within a city. We then revisit other issues raised by the NRC and discuss how certain limitations can be easily overcome through the adoption of random coefficient models of drug prices and by paying serious attention to drug form and distribution levels. Although the sample remains a convenience sample, we demonstrate how construction of city-specific price and purity series that pay careful attention to the data and incorporate existing knowledge of drug markets (e.g. the expected purity hypothesis) are internally consistent and can be externally validated. The findings from this study have important implications regarding the utility of these data and the appropriateness of using them in economic analyses of supply, demand and harms.
Handle: RePEc:nbr:nberwo:14224
Template-Type: ReDIF-Paper 1.0
Title: Shared Capitalism in the U.S. Economy? Prevalence, Characteristics, and Employee Views of Financial Participation in Enterprises
Classification-JEL: J33; J54; L23
Author-Name: Douglas L. Kruse
Author-Person: pkr335
Author-Name: Joseph R. Blasi
Author-Name: Rhokeun Park
Note: LS
Number: 14225
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14225
File-URL: http://www.nber.org/papers/w14225.pdf
File-Format: application/pdf
Publication-Status: published as Shared Capitalism in the U.S. Economy: Prevalence, Characteristics, and Employee Views of Financial Participation in Enterprises, Douglas L. Kruse, Joseph R. Blasi, Rhokeun Park. in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options , Kruse, Freeman, and Blasi. 2010
Abstract: Between one-third and one-half of employees participate directly in company performance through profit sharing, gainsharing, employee ownership, or stock options. This flies in the face of concerns about the free rider problem and worker risk aversion in group incentives, and raises many questions about the effects on firms and workers. This paper lays out the major reasons we may see such "shared capitalism" plans, and reviews recent nationally representative surveys on the prevalence of these plans. We also introduce the NBER shared capitalism data, based on questions added to the 2002 and 2006 General Social Surveys (GSS) and more than 40,000 employee surveys from 14 companies with different combinations of shared capitalism plans. We find that while shared capitalism exists broadly throughout the economy, it is more likely in larger establishments. The free rider effect may be countered by the use of other policies to create productive teamwork and a cooperative culture: shared capitalism is positively linked to workplace decision-making, training, job security, teamwork, the ability to easily observe co-worker performance, and low levels of supervision. Also, more risk-averse employees avoid participating in several types of shared capitalism, but two-thirds of even the most risk-averse employees in these companies say they want shared capitalism as part of their pay package. The effects of these plans for both workers and firms are more fully explored in accompanying papers.
Handle: RePEc:nbr:nberwo:14225
Template-Type: ReDIF-Paper 1.0
Title: Inventor Moral Hazard in University Licensing: The Role of Contracts
Classification-JEL: D82; L14; O3
Author-Name: Emmanuel Dechenaux
Author-Person: pde725
Author-Name: Jerry Thursby
Author-Person: pth25
Author-Name: Marie C. Thursby
Author-Person: pth283
Note: PR
Number: 14226
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14226
File-URL: http://www.nber.org/papers/w14226.pdf
File-Format: application/pdf
Publication-Status: published as Dechenaux, Emmanuel & Thursby, Jerry & Thursby, Marie, 2011. "Inventor moral hazard in university licensing: The role of contracts," Research Policy, Elsevier, vol. 40(1), pages 94-104, February.
Abstract: We examine commonly observed forms of payment, such as milestones, royalties, or consulting contracts as ways of engaging inventors in the development of licensed inventions. Our theoretical model shows that when milestones are feasible, royalties are not optimal unless the licensing firm is risk averse. The model also predicts the use of consulting contracts which improve the firm's ability to monitor inventor effort. Because these contracts increase the firm's expected profits, the upfront fee that the university can charge is higher than otherwise. These results therefore support the commonly observed university policy of allowing faculty to consult with licensing firms outside of their university contracts. They also support firm policies of including milestones. An empirical analysis based on a survey of 112 businesses that license-in university inventions supports the complementarity of milestones and consulting suggested by the theory.
Handle: RePEc:nbr:nberwo:14226
Template-Type: ReDIF-Paper 1.0
Title: WORKER RESPONSES TO SHIRKING UNDER SHARED CAPITALISM
Classification-JEL: J33; J54; L23
Author-Name: Richard Freeman
Author-Person: pfr23
Author-Name: Douglas Kruse
Author-Person: pkr335
Author-Name: Joseph Blasi
Note: LS
Number: 14227
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14227
File-URL: http://www.nber.org/papers/w14227.pdf
File-Format: application/pdf
Publication-Status: published as Worker Responses to Shirking under Shared Capitalism, Richard B. Freeman, Douglas L. Kruse, Joseph R. Blasi. in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options , Kruse, Freeman, and Blasi. 2010
Abstract: Group incentive systems have to overcome the free rider or 1/N problem, which gives workers an incentive to shirk, if they are to succeed. This paper uses new questions on responses to shirking from the General Social Survey and a special NBER survey of workers at over 300 worksites in 14 companies that have some form of group incentive pay to examine how well workers can monitor their peers and what they do when the peers are not working up to speed. The paper finds that: 1) most workers say that they can detect fellow employees who shirk; 2) many report that they would speak to the shirker or report the behavior or a supervisor, and many report that they did so in the past; 3) the proportion that takes action against shirkers is greatest among workers paid under group incentive systems, in smaller companies, and in companies with good employee-management relations; 4) group incentives interact with high-performance human resource policies such as employee involvement teams, training, task variety, low levels of supervision, and good fixed wages to induce more workers to act against shirking; 5) workers in workplaces where there is more anti-shirking behavior report that co-workers work harder, encourage other workers more, and report that their workplace facility is more effective in ways that should raise productivity and profits.
Handle: RePEc:nbr:nberwo:14227
Template-Type: ReDIF-Paper 1.0
Title: An Economic Model of the Planning Fallacy
Classification-JEL: D10; D80; E21
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Filippos Papakonstantinou
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: EFG AP
Number: 14228
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14228
File-URL: http://www.nber.org/papers/w14228.pdf
File-Format: application/pdf
Abstract: People tend to underestimate the work involved in completing tasks and consequently finish tasks later than expected or do an inordinate amount of work right before projects are due. We present a theory in which people underpredict and procrastinate because the ex-ante utility benefits of anticipating that a task will be easy to complete outweigh the average ex-post costs of poor planning. We show that, given a commitment device, people self-impose deadlines that are binding but require less smoothing of work than those chosen by a person with objective beliefs. We test our theory using extant experimental evidence on differences in expectations and behavior. We find that reported beliefs and behavior generally respond as our theory predicts. For example, monetary incentives for accurate prediction ameliorate the planning fallacy while incentives for rapid completion aggravate it.
Handle: RePEc:nbr:nberwo:14228
Template-Type: ReDIF-Paper 1.0
Title: Risk and Lack of Diversification under Employee Ownership and Shared Capitalism
Classification-JEL: D81; J33; J54; L23
Author-Name: Joseph R. Blasi
Author-Name: Douglas L. Kruse
Author-Person: pkr335
Author-Name: Harry M. Markowitz
Note: LS
Number: 14229
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14229
File-URL: http://www.nber.org/papers/w14229.pdf
File-Format: application/pdf
Publication-Status: published as Risk and Lack of Diversification under Employee Ownership and Shared Capitalism, Joseph R. Blasi, Douglas L. Kruse, Harry M. Markowitz. in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options , Kruse, Freeman, and Blasi. 2010
Abstract: Some analysts view risk as the Achilles Heel of employee ownership and to some extent variable pay plans such as profit sharing and gainsharing. Workers in such "shared capitalist" firms may invest too much of their wealth in the firm, contrary to the principle of diversification. This paper addresses whether the risk in shared capitalism makes it unwise for most workers or whether the risk can be managed to limit much of the loss of utility from holding the extra risk. We create an index of financial security based on worker pay and wealth, and find that workers who feel financially insecure exhibit fewer of the positive outcomes associated with shared capitalism, and are less interested than other workers in receiving more employee ownership or even more profit sharing in their workplaces. This response is substantially lessened, however, when accounting for worker empowerment, good employee relations, and high-performance work bundles that appear to buffer worker response toward risk and increase interest in shared capitalism plans. We also discuss portfolio theory which suggests that any risky investment -- including stock in one's company -- can be part of an efficient portfolio as long as the overall portfolio is properly diversified. We show that given estimates of risk aversion parameters, workers could prudently hold reasonable proportions of their assets in employee stock ownership of their firm with only a modest loss in utility due to risk. A good strategy for firms is to personalize individual portfolios on the basis of worker characteristics and preferences, developing investment strategies that would diversify each worker's entire portfolio in ways consistent with individual risk preferences.
Handle: RePEc:nbr:nberwo:14229
Template-Type: ReDIF-Paper 1.0
Title: Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance
Classification-JEL: J33; J54; L23; L25
Author-Name: Joseph R. Blasi
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: Chris Mackin
Author-Name: Douglas L. Kruse
Author-Person: pkr335
Note: LS
Number: 14230
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14230
File-URL: http://www.nber.org/papers/w14230.pdf
File-Format: application/pdf
Publication-Status: published as Joseph R. Blasi & Richard B. Freeman & Christopher Mackin & Douglas L. Kruse, 2010. "Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 139-165 National Bureau of Economic Research, Inc.
Abstract: This paper uses data from NBER surveys of over 40,000 employees in hundreds of facilities in 14 firms and from employees on the 2002 and 2006 General Social Surveys to explore how shared compensation affects turnover, absenteeism, loyalty, worker effort, and other outcomes affecting workplace performance. The empirical analysis shows that shared capitalism has beneficial effects on all outcomes save for absenteeism and that it has its strongest effects on turnover, loyalty, and worker effort when it is combined with: a) high-performance work policies (employee involvement, training, and job security), b) low levels of supervision, and c) fixed wages that are at or above market level. Most workers report that cash incentives, stock options, ESOP stock, and ESPP participation motivate them to work harder. The interaction of the effects of shared capitalism with other corporate policies suggests that the various shared capitalist and other policies may operate through a latent variable, "corporate culture".
Handle: RePEc:nbr:nberwo:14230
Template-Type: ReDIF-Paper 1.0
Title: Adjusting Government Policies for Age Inflation
Classification-JEL: H51; H55; J11; J14
Author-Name: John B. Shoven
Note: AG PE
Number: 14231
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14231
File-URL: http://www.nber.org/papers/w14231.pdf
File-Format: application/pdf
Publication-Status: published as Adjusting Government Policies for Age Inflation, John B. Shoven, Gopi Shah Goda. in Demography and the Economy, Shoven. 2011
Abstract: Government policies that are based on age do not adjust to the fact that a given age is associated with a higher remaining life expectancy and lower mortality risk relative to earlier time periods due to improvements in mortality. We examine four possible methods for adjusting the eligibility ages for Social Security, Medicare, and Individual Retirement Accounts to determine what eligibility ages would be today and in 2050 if adjustments for mortality improvement were taken into account. We find that historical adjustment of eligibility ages for age inflation would have increased ages of eligibility by approximately 0.15 years annually. Failure to adjust for mortality improvement implies the percent of the population eligible to receive full Social Security benefits and Medicare will increase substantially relative to the share eligible under a policy of age adjustment.
Handle: RePEc:nbr:nberwo:14231
Template-Type: ReDIF-Paper 1.0
Title: Hiring Cheerleaders: Board Appointments of "Independent" Directors
Classification-JEL: G28; G34; J24; J44
Author-Name: Lauren Cohen
Author-Name: Andrea Frazzini
Author-Person: pfr54
Author-Name: Christopher Malloy
Author-Person: pma1313
Note: AP CF
Number: 14232
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14232
File-URL: http://www.nber.org/papers/w14232.pdf
File-Format: application/pdf
Publication-Status: published as Lauren Cohen & Andrea Frazzini & Christopher J. Malloy, 2012. "Hiring Cheerleaders: Board Appointments of "Independent" Directors," Management Science, INFORMS, vol. 58(6), pages 1039-1058, June.
Abstract: We provide evidence that firms appoint independent directors who are overly sympathetic to management, while still technically independent according to regulatory definitions. We explore a subset of independent directors for whom we have detailed, micro-level data on their views regarding the firm prior to being appointed to the board: sell-side analysts who are subsequently appointed to the board of companies they previously covered. We find that boards appoint overly optimistic analysts who are also poor relative performers. The magnitude of the optimistic bias is large: 82.0% of appointed recommendations are strong-buy/buy recommendations, compared to 56.9% for all other analyst recommendations. We find that appointed analysts' optimism is stronger at precisely those times when firms' benefits are larger, and that appointing firms increase earnings management, and perform poorly, following these board appointments.
Handle: RePEc:nbr:nberwo:14232
Template-Type: ReDIF-Paper 1.0
Title: Do Workers Gain by Sharing? Employee Outcomes under Employee Ownership, Profit Sharing, and Broad-based Stock Options
Classification-JEL: J33; J54; L23
Author-Name: Douglas Kruse
Author-Person: pkr335
Author-Name: Richard Freeman
Author-Person: pfr23
Author-Name: Joseph Blasi
Note: LS
Number: 14233
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14233
File-URL: http://www.nber.org/papers/w14233.pdf
File-Format: application/pdf
Publication-Status: published as Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Do Workers Gain by Sharing? Employee Outcomes under Employee Ownership, Profit Sharing, and Broad-Based Stock Options," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 257-289 National Bureau of Economic Research, Inc.
Abstract: This paper examines how shared capitalism compensation systems - those that link employee pay to company performance - affect diverse employee outcomes. It uses two data sets: the national GSS survey that provides a broad representative view of the extent of the programs; and the NBER Shared Capitalism Project surveys of workers in 14 companies that use shared capitalism programs extensively. We find that greater involvement in the programs is generally linked to greater participation in decisions, higher quality supervision and treatment of employees, more training, higher pay and benefits, greater job security, and higher job satisfaction. We also find positive interactions of shared capitalism with high-performance policies in predicting participation in decisions and overall job satisfaction, and negative interactions of shared capitalism with close supervision in affecting almost all of the outcomes. Overall the results support the idea that workers can gain by sharing, but whether this happens is contingent on other workplace policies.
Handle: RePEc:nbr:nberwo:14233
Template-Type: ReDIF-Paper 1.0
Title: Who Has a Better Idea? Innovation, Shared Capitalism, and HR Policies
Classification-JEL: J33; J54; L23; L25
Author-Name: Erika Harden
Author-Name: Douglas L. Kruse
Author-Person: pkr335
Author-Name: Joseph R. Blasi
Note: LS
Number: 14234
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14234
File-URL: http://www.nber.org/papers/w14234.pdf
File-Format: application/pdf
Abstract: We investigate the relationship of "shared capitalist" compensation systems - profit/gainsharing, employee ownership, and stock options - to the culture for innovation and employees' ability and willingness to engage in innovative activity. Using a large dataset with over 25,000 employee surveys in over 200 worksites of a large multinational organization, we find that both shared capitalism compensation and high performance work policies contribute to these innovation outcomes. Owning company stock is the most consistently positive compensation variable in predicting both an innovation culture and willingness to engage in innovative activity. We also find that shared capitalism and high performance work policies have stronger effects in predicting an innovation culture when they are combined, and that the effects of shared capitalism and high performance work policies are partially, but not wholly, mediated through greater employee alignment with company strategy. The findings are consistent with agency theories predicting that the principal agent problem can be addressed by a combination of shared incentives and cooperative culture which encourages mutual monitoring and opportunities to share information.
Handle: RePEc:nbr:nberwo:14234
Template-Type: ReDIF-Paper 1.0
Title: How Does Shared Capitalism Affect Economic Performance in the UK?
Classification-JEL: J33; L23; L25
Author-Name: Alex Bryson
Author-Person: pbr105
Author-Name: Richard Freeman
Author-Person: pfr23
Note: LS
Number: 14235
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14235
File-URL: http://www.nber.org/papers/w14235.pdf
File-Format: application/pdf
Abstract: This paper uses nationally representative linked workplace-employee data from the British 2004 Workplace Employment Relations Survey to examine the operation of shared capitalist forms of pay--profit-sharing and group pay for performance, employee share ownership, and stock options--and their link to productivity. It shows that shared capitalism has grown in the UK, as it has in the US; that different forms of shared capitalist pay complement each other and other labor practices in the sense that firms use them together more than they would if they chose modes of pay and work practices independently; and that workplaces switch among schemes frequently, which suggests that they have trouble optimizing and the transactions cost of switching are relatively low. Among the single schemes, share ownership has the clearest positive association with productivity, but its impact is largest when firms combine it with other forms of shared capitalist pay and modes of organization.
Handle: RePEc:nbr:nberwo:14235
Template-Type: ReDIF-Paper 1.0
Title: Does Employee Ignorance Undermine Shared Capitalism?
Classification-JEL: J33
Author-Name: John W. Budd
Author-Person: pbu1
Note: LS
Number: 14236
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14236
File-URL: http://www.nber.org/papers/w14236.pdf
File-Format: application/pdf
Publication-Status: published as Does Employee Ignorance Undermine Shared Capitalism?, John W. Budd. in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options , Kruse, Freeman, and Blasi. 2010
Abstract: The potential of shared capitalism to improve individual and organizational performance through financial incentives depends on employees knowing about and participating in compensation plans that link rewards to performance. This paper therefore analyzes a survey of employees from multiple companies to assess the extent to which employees are ignorant about company, group, and individual-based incentive pay plans and ESOPs. The findings reveal significant amounts of employee ignorance in both under- and overstating the extent to which such plans apply to them individually.
Handle: RePEc:nbr:nberwo:14236
Template-Type: ReDIF-Paper 1.0
Title: How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation
Classification-JEL: D12; D91; H2; H24; H31
Author-Name: Jon Bakija
Author-Person: pba72
Author-Name: Bradley Heim
Author-Person: phe227
Note: PE
Number: 14237
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14237
File-URL: http://www.nber.org/papers/w14237.pdf
File-Format: application/pdf
Abstract: We estimate the elasticity of charitable giving with respect to its price and after-tax income using a panel of over 550,000 disproportionately high-income tax returns spanning the years 1979 through 2005. Improvements relative to the previous literature include: using state tax variation to help identify our model while controlling for both individual- and time-specific unobserved heterogeneity; carefully dealing with expectations; allowing people at different income levels to have different degrees responsiveness to taxation and different time paths of unobservable influences on giving; and using a measure of charitable giving that more closely approximates current donations. To address the omitted variable bias that would otherwise arise from failing to control for unobservable expectations of future prices and future incomes, we use predictable changes in future federal and state marginal tax rates and tax liabilities, arising from their pre-announced and phased-in nature, as instruments for future changes in prices and income. Our estimate of the elasticity of giving with respect to a persistent price change for the full sample is about -0.7; this elasticity is generally larger when the sample is limited to high-income people and we control for time-varying unobservable influences on charity in a flexible fashion. We find some evidence, particularly among very high-income people, of re-timing giving in response to expected future changes in price, but this finding is sensitive to the source of identification for the price effects. Our estimates are broadly consistent the permanent income hypothesis. Expenditures on charitable giving are estimated to respond more strongly to persistent changes in income than to transitory fluctuations in income. Moreover, we find evidence in some specifications that people will increase their charitable giving now in response to a predictable reduction in future tax liability arising from tax reform.
Handle: RePEc:nbr:nberwo:14237
Template-Type: ReDIF-Paper 1.0
Title: The Greenness of Cities: Carbon Dioxide Emissions and Urban Development
Classification-JEL: Q5
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 14238
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14238
File-URL: http://www.nber.org/papers/w14238.pdf
File-Format: application/pdf
Publication-Status: published as Glaeser, Edward L. & Kahn, Matthew E., 2010. "The greenness of cities: Carbon dioxide emissions and urban development," Journal of Urban Economics, Elsevier, vol. 67(3), pages 404-418, May.
Abstract: Carbon dioxide emissions may create significant social harm because of global warming, yet American urban development tends to be in low density areas with very hot summers. In this paper, we attempt to quantify the carbon dioxide emissions associated with new construction in different locations across the country. We look at emissions from driving, public transit, home heating, and household electricity usage. We find that the lowest emissions areas are generally in California and that the highest emissions areas are in Texas and Oklahoma. There is a strong negative association between emissions and land use regulations. By restricting new development, the cleanest areas of the country would seem to be pushing new development towards places with higher emissions. Cities generally have significantly lower emissions than suburban areas, and the city-suburb gap is particularly large in older areas, like New York.
Handle: RePEc:nbr:nberwo:14238
Template-Type: ReDIF-Paper 1.0
Title: Dynamics and Stability of Constitutions, Coalitions, and Clubs
Classification-JEL: C71; D71; D74
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Georgy Egorov
Author-Person: peg15
Author-Name: Konstantin Sonin
Author-Person: pso47
Note: EFG POL
Number: 14239
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14239
File-URL: http://www.nber.org/papers/w14239.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2012. "Dynamics and Stability of Constitutions, Coalitions, and Clubs," American Economic Review, American Economic Association, vol. 102(4), pages 1446-76, June.
Abstract: A central feature of dynamic collective decision-making is that the rules that govern the procedures for future decision-making and the distribution of political power across players are determined by current decisions. For example, current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations. We develop a general framework for the analysis of this class of dynamic problems. Under relatively natural acyclicity assumptions, we provide a complete characterization of dynamically stable states as functions of the initial state and determine conditions for their uniqueness. We show how this framework can be applied in political economy, coalition formation, and the analysis of the dynamics of clubs. The explicit characterization we provide highlights two intuitive features of dynamic collective decision-making: (1) a social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society; (2) efficiency-enhancing changes are often resisted because of further social changes that they will engender.
Handle: RePEc:nbr:nberwo:14239
Template-Type: ReDIF-Paper 1.0
Title: Technology's Edge: The Educational Benefits of Computer-Aided Instruction
Classification-JEL: I2; J0
Author-Name: Lisa Barrow
Author-Person: pba144
Author-Name: Lisa Markman
Author-Name: Cecilia E. Rouse
Note: CH TWP
Number: 14240
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14240
File-URL: http://www.nber.org/papers/w14240.pdf
File-Format: application/pdf
Publication-Status: published as Lisa Barrow & Lisa Markman & Cecilia Elena Rouse, 2009. "Technology's Edge: The Educational Benefits of Computer-Aided Instruction," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 52-74, February.
Abstract: We present results from a randomized study of a well-defined use of computers in schools: a popular instructional computer program for pre-algebra and algebra. We assess the program using a test designed to target pre-algebra and algebra skills. Students randomly assigned to computer-aided instruction score 0.17 of a standard deviation higher on pre-algebra/algebra tests than students randomly assigned to traditional instruction. We hypothesize that the effectiveness arises from increased individualized instruction as the effects appear larger for students in larger classes and in classes with high student absentee rates.
Handle: RePEc:nbr:nberwo:14240
Template-Type: ReDIF-Paper 1.0
Title: Distributional Effects of Environmental and Energy Policy: An Introduction
Classification-JEL: H22; Q48; Q52
Author-Name: Don Fullerton
Author-Person: pfu10
Note: EEE PE
Number: 14241
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14241
File-URL: http://www.nber.org/papers/w14241.pdf
File-Format: application/pdf
Abstract: This chapter reviews literature on the distributional effects of environmental and energy policy. In particular, many effects of such policy are likely regressive. First, it raises the price of fossil-fuel-intensive products, expenditures on which are a high fraction of low-income budgets. Second, if abatement technologies are capital-intensive, then any mandate to abate pollution may induce firms to use more capital. If demand for capital is raised relative to labor, then a lower relative wage may also hurt low-income households. Third, pollution permits handed out to firms bestow scarcity rents on well-off individuals who own those firms. Fourth, low-income individuals may place more value on food and shelter than on incremental improvements in environmental quality. If high-income individuals get the most benefit of pollution abatement, then this effect is regressive as well. Fifth, low-income renters miss out on house price capitalization of air quality benefits. Well-off landlords may reap those gains. Sixth, transition effects could well hurt the unemployed who are already at some disadvantage. These six effects might all hurt the poor more than the rich. This paper discusses whether these fears are valid, and whether anything can be done about them.
Handle: RePEc:nbr:nberwo:14241
Template-Type: ReDIF-Paper 1.0
Title: The Macroeconomic Implications of a Key Currency
Classification-JEL: F3; F4; F41
Author-Name: Matthew Canzoneri
Author-Person: pca260
Author-Name: Robert E. Cumby
Author-Person: pcu115
Author-Name: Behzad Diba
Author-Person: pdi273
Author-Name: David Lopez-Salido
Author-Person: plo26
Note: IFM
Number: 14242
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14242
File-URL: http://www.nber.org/papers/w14242.pdf
File-Format: application/pdf
Abstract: What are the macroeconomic consequences of the dominant role of the dollar in the international monetary system? Here, we present a calibrated two country model in which exports are invoiced in the key currency, and government bonds denominated in the key currency are held internationally to facilitate trade. Domestic government bonds and money are held in each country to facilitate domestic transactions. Our model generates deviations from uncovered interest parity that are as volatile as some empirical estimates, but much too small by others. Our model also speaks to some other empirical anomalies, such as the Backus - Smith puzzle. Shocks affecting asset supplies -- such as bond financed tax cuts, and open market operations -- have large effects in our model because they generate non-Ricardian changes in household wealth. Generally, shocks emanating from the key currency country do more to destabilize the world economy than equal sized shocks coming from the other country. Similarly, monetary and fiscal policy innovations in the key currency country are more potent than those in the other country. On the other hand, the key currency country is more vulnerable to financial market turbulence, such as a sell off of key currency bonds, which can lower consumption dramatically.
Handle: RePEc:nbr:nberwo:14242
Template-Type: ReDIF-Paper 1.0
Title: Modeling the Long Run: Valuation in Dynamic Stochastic Economies
Classification-JEL: C0; E44; G1
Author-Name: Lars Peter Hansen
Author-Person: pha303
Note: AP EFG
Number: 14243
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14243
File-URL: http://www.nber.org/papers/w14243.pdf
File-Format: application/pdf
Publication-Status: published as Dynamic Valuation Decomposition Within Stochastic Economies; Fisher–Schultz Lecture, Econometrica 80(3):911-967, May, 2012
Abstract: I explore the equilibrium value implications of economic models that incorporate reactions to a stochastic environment. I propose a dynamic value decomposition (DVD) designed to distinguish components of an underlying economic model that influence values over long horizons from components that impact only the short run. To quantify the role of parameter sensitivity and to impute long-term risk prices, I develop an associated perturbation technique. Finally, I use DVD methods to study formally some example economies and to speculate about others. A DVD is enabled by constructing operators indexed by the elapsed time between the date of pricing and the date of the future payoff (i.e. the future realization of a consumption claim). Thus formulated, methods from applied mathematics permit me to characterize valuation behavior as the time between price determination and payoff realization becomes large. An outcome of this analysis is the construction of a multiplicative martingale component of a process that is used to represent valuation in a dynamic economy with stochastic growth. I contrast the differences in the applicability between this multiplicative martingale method and an additive martingale method familiar from time series analysis that is used to identify shocks with long-run economic consequences.
Handle: RePEc:nbr:nberwo:14243
Template-Type: ReDIF-Paper 1.0
Title: Monetary Aggregates and Liquidity in a Neo-Wicksellian Framework
Classification-JEL: E40; E50
Author-Name: Matthew Canzoneri
Author-Person: pca260
Author-Name: Robert E. Cumby
Author-Person: pcu115
Author-Name: Behzad Diba
Author-Person: pdi273
Author-Name: David Lopez-Salido
Author-Person: plo26
Note: IFM ME
Number: 14244
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14244
File-URL: http://www.nber.org/papers/w14244.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Canzoneri & Robert Cumby & Behzad Diba & David Lãpez-Salido, 2008. "Monetary Aggregates and Liquidity in a Neo-Wicksellian Framework," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(8), pages 1667-1698, December.
Abstract: Woodford (2003) describes a popular class of neo-Wicksellian models in which monetary policy is characterized by an interest-rate rule, and the money market and financial institutions are typically not even modeled. Critics contend that these models are incomplete and unsuitable for monetary-policy evaluation. Our Banks and Bonds model starts with a standard neo-Wicksellian model and then adds banks and a role for bonds in the liquidity management of households and banks. The Banks and Bonds model gives a more complete description of the economy, but the neo-Wicksellian model has the virtue of simplicity. Our purpose here is to see if the neo-Wicksellian model gives a reasonably accurate account of macroeconomic behavior in the more complete Banks and Bonds model. We do this by comparing the models' second moments, variance decompositions and impulse response functions. We also study the role of monetary aggregates and velocity in predicting inflation in the two models.
Handle: RePEc:nbr:nberwo:14244
Template-Type: ReDIF-Paper 1.0
Title: Why Do Foreign Firms Leave U.S. Equity Markets?
Classification-JEL: F30; G15; G34
Author-Name: Craig Doidge
Author-Name: G. Andrew Karolyi
Author-Person: pka329
Author-Name: René M. Stulz
Note: CF IFM
Number: 14245
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14245
File-URL: http://www.nber.org/papers/w14245.pdf
File-Format: application/pdf
Publication-Status: published as "Why Do Foreign Firms Leave U.S. Equity Markets?," with Craig Doidge and G. Andrew Karolyi, Journal of Finance, v.65(4), 1507-1553.
Abstract: This paper investigates Securities and Exchange Commission (SEC) deregistrations by foreign firms from the time the Sarbanes-Oxley Act (SOX) was passed in 2002 through 2008. We test two theories, the bonding theory and the loss of competitiveness theory, to understand why foreign firms leave U.S. equity markets and how deregistration affects their shareholders. Firms that deregister grow more slowly, need less capital, and experience poor stock return performance prior to deregistration compared to other foreign firms listed in the U.S. that do not deregister. Until the SEC adopted Exchange Act Rule 12h-6 in 2007 the deregistration process was extremely difficult for foreign firms. Easing these procedures led to a spike in deregistration activity in the second-half of 2007 that did not extend into 2008. We find that deregistrations are generally associated with adverse stock-price reactions, but these reactions are much weaker in 2007 than in other years. It is unclear whether SOX affected foreign-listed firms and deregistering firms adversely in general, but there is evidence that the smaller firms that deregistered after the adoption of Rule 12h-6 reacted more negatively to announcements that foreign firms would not be exempt from SOX. Overall, the evidence supports the bonding theory rather than the loss of competitiveness theory: foreign firms list shares in the U.S. in order to raise capital at the lowest possible cost to finance growth opportunities and, when those opportunities disappear, a listing becomes less valuable to corporate insiders and they go home if they can. But when they do so, minority shareholders typically lose.
Handle: RePEc:nbr:nberwo:14245
Template-Type: ReDIF-Paper 1.0
Title: Externalities in the Classroom: How Children Exposed to Domestic Violence Affect Everyone's Kids
Classification-JEL: I2; J24
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Mark L. Hoekstra
Author-Person: pho613
Note: CH ED LS
Number: 14246
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14246
File-URL: http://www.nber.org/papers/w14246.pdf
File-Format: application/pdf
Publication-Status: published as Scott E. Carrell & Mark L. Hoekstra, 2010. "Externalities in the Classroom: How Children Exposed to Domestic Violence Affect Everyone's Kids," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 211-28, January.
Abstract: It is estimated that between ten and twenty percent of children in the United States are exposed to domestic violence annually. While much is known about the impact of domestic violence and other family problems on children within the home, little is known regarding the extent to which these problems spill over to children outside the family. The widespread perception among parents and school officials is that these externalities are significant, though measuring them is difficult due to data and methodological limitations. We estimate the negative spillovers caused by children from troubled families by exploiting a unique data set in which children's school records are matched to domestic violence cases filed by their parent. To overcome selection bias, we identify the effects using the idiosyncratic variation in peers from troubled families within the same school and grade over time. We find that children from troubled families significantly decrease their peers' reading and math test scores and significantly increase misbehavior of others in the classroom. The effects are heterogeneous across income, race, and gender and appear to work primarily through troubled boys. The results are robust to within-sibling differences and we find no evidence that non-random selection is driving the results.
Handle: RePEc:nbr:nberwo:14246
Template-Type: ReDIF-Paper 1.0
Title: Estimating Trends in US Income Inequality Using the Current Population Survey: The Importance of Controlling for Censoring
Classification-JEL: C81; D31
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Shuaizhang Feng
Author-Name: Stephen P. Jenkins
Author-Person: pje7
Author-Name: Jeff Larrimore
Author-Person: pla377
Note: LS PE TWP
Number: 14247
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14247
File-URL: http://www.nber.org/papers/w14247.pdf
File-Format: application/pdf
Publication-Status: published as Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2011. "Estimating trends in US income inequality using the Current Population Survey: the importance of controlling for censoring," Journal of Economic Inequality, Springer, vol. 9(3), pages 393-415, September.
Abstract: Using internal and public use March Current Population Survey (CPS) data, we analyze trends in US income inequality (1975-2004). We find that the upward trend in income inequality prior to 1993 significantly slowed thereafter once we control for top coding in the public use data and censoring in the internal data. Because both series do not capture trends at the very top of the income distribution, we use a multiple imputation approach in which values for censored observations are imputed using draws from a Generalized Beta distribution of the Second Kind (GB2) fitted to internal data. Doing so, we find income inequality trends similar to those derived from unadjusted internal data. Our trend results are generally robust to the choice of inequality index, whether Gini coefficient or other commonly-used indices. When we compare our best estimates of the income shares held by the richest tenth with those reported by Piketty and Saez (2003), our trends fairly closely match their trends, except for the top 1 percent of the distribution. Thus, we argue that if United States income inequality has been substantially increasing since 1993, such increases are confined to this very high income group.
Handle: RePEc:nbr:nberwo:14247
Template-Type: ReDIF-Paper 1.0
Title: HIV and Fertility in Africa: First Evidence from Population Based Surveys
Classification-JEL: I12; J13; O12
Author-Name: Chinhui Juhn
Author-Person: pju42
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Belgi Turan
Author-Person: ptu66
Note: EFG EH LS
Number: 14248
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14248
File-URL: http://www.nber.org/papers/w14248.pdf
File-Format: application/pdf
Publication-Status: published as Chinhui Juhn & Sebnem Kalemli-Ozcan & Belgi Turan, 2013. "HIV and fertility in Africa: first evidence from population-based surveys," Journal of Population Economics, Springer, vol. 26(3), pages 835-853, July.
Abstract: The historical pattern of the demographic transition suggests that fertility declines follow mortality declines, followed by a rise in human capital accumulation and economic growth. The HIV/AIDS epidemic threatens to reverse this path. A recent paper by Young (2005), however, suggests that similar to the "Black Death" episode in Europe, HIV/AIDS will actually lead to higher growth per capita among the affected African countries. Not only will population decline, behavioral responses in fertility will reinforce this decline by reducing the willingness to engage in unprotected sex. We utilize recent rounds of the Demographic and Health Surveys which link an individual woman's fertility outcomes to her HIV status based on testing. The data allows us to distinguish the effect of own positive HIV status on fertility (which may be due to lower fecundity and other physiological reasons) from the behavioral response to higher mortality risk, as measured by the local community HIV prevalence. We show that HIV-infected women have significantly lower fertility. In contrast to Young (2005), however, we find that local community HIV prevalence has no significant effect on non-infected women's fertility.
Handle: RePEc:nbr:nberwo:14248
Template-Type: ReDIF-Paper 1.0
Title: Crises and Sudden Stops: Evidence from International Bond and Syndicated-Loan Markets
Classification-JEL: F30; F36
Author-Name: Graciela L. Kaminsky
Author-Person: pka84
Note: IFM
Number: 14249
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14249
File-URL: http://www.nber.org/papers/w14249.pdf
File-Format: application/pdf
Publication-Status: published as Graciela L. Kaminsky, 2008. "Crises and Sudden Stops: Evidence from International Bond and Syndicated-Loan Markets," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 26, pages 107-130, December.
Abstract: The crises in Mexico, Thailand, and Russia in the 1990s spread quite rapidly to countries as far apart as South Africa and Pakistan. In the aftermath of these crises, many emerging economies lost access to international capital markets. Using data on international primary issuance, this paper studies the determinants of contagion and sudden stops following those crises. The results indicate that contagion and sudden stops tend to occur in economies with financial fragility and current account problems. They also show that high integration in international capital markets exposes countries to sudden stops even in the absence of domestic vulnerabilities.
Handle: RePEc:nbr:nberwo:14249
Template-Type: ReDIF-Paper 1.0
Title: On the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms
Classification-JEL: G24; G32
Author-Name: Manju Puri
Author-Person: ppu153
Author-Name: Rebecca Zarutskie
Author-Person: pza199
Note: CF
Number: 14250
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14250
File-URL: http://www.nber.org/papers/w14250.pdf
File-Format: application/pdf
Publication-Status: published as Manju Puri & Rebecca Zarutskie, 2012. "On the Life Cycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms," Journal of Finance, American Finance Association, vol. 67(6), pages 2247-2293, December.
Abstract: We use a new data set that tracks U.S. firms from their birth over two decades to understand the life cycle dynamics and outcomes (both successes and failures) of VC- and non-VC financed firms. We first ask to what market-wide and firm-level characteristics venture capitalists respond in choosing to make their investments and how this differs for firms financed solely by non-VC sources of entrepreneurial capital. We then ask what are the eventual differences in outcomes for firms that receive VC financing relative to non-VC-financed firms. Our findings suggest that VCs follow public market signals similar to other investors and typically invest largely in young firms, with potential for large scale being an important criterion. The main way that VC financed firms differ from matched non-VC financed firms, is they demonstrate remarkably larger scale both for successful and failed firms, at every point of the firms' life cycle. They grow more rapidly, but we see little difference in profitability measures at times of exit. We further examine a number of hypotheses relating to VC-financed firms' failure. We find that VC-financed firms' cumulative failure rates are lower than non-VC-financed firms but the story is nuanced. VC appears initially "patient" in that VC-financed firms are less likely to fail in the first five years but conditional on surviving past this point become more likely to fail relative to non-VC-financed firms. We perform a number of robustness checks and find that VC does not appear to have more stringent survival thresholds nor do VC-financed firm failures appear to be disguised as acquisitions nor do particular kinds of VC firms seem to be driving our results. Overall, our analysis supports the view that VC is "patient" capital relative to other non-VC sources of entrepreneurial capital in the early part of firms' lifecycles and that an important criterion for receiving VC investment is potential for large scale, rather than level of profitability, prior to exit.
Handle: RePEc:nbr:nberwo:14250
Template-Type: ReDIF-Paper 1.0
Title: Recent Developments in the Econometrics of Program Evaluation
Classification-JEL: C01
Author-Name: Guido M. Imbens
Author-Person: pim4
Author-Name: Jeffrey M. Wooldridge
Author-Person: pwo39
Note: LS
Number: 14251
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14251
File-URL: http://www.nber.org/papers/w14251.pdf
File-Format: application/pdf
Publication-Status: published as Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
Abstract: Many empirical questions in economics and other social sciences depend on causal effects of programs or policiy interventions. In the last two decades much research has been done on the econometric and statistical analysis of the effects of such programs or treatments. This recent theoretical literature has built on, and combined features of, earlier work in both the statistics and econometrics literatures. It has by now reached a level of maturity that makes it an important tool in many areas of empirical research in economics, including labor economics, public finance, development economics, industrial organization and other areas of empirical micro-economics. In this review we discuss some of the recent developments. We focus primarily on practical issues for empirical researchers, as well as provide a historical overview of the area and give references to more technical research.
Handle: RePEc:nbr:nberwo:14251
Template-Type: ReDIF-Paper 1.0
Title: Information, Learning, and Drug Diffusion: the Case of Cox-2 Inhibitors
Classification-JEL: D8; I11; L15; L84
Author-Name: Pradeep Chintadunta
Author-Person: pch519
Author-Name: Renna Jiang
Author-Name: Ginger Z. Jin
Note: IO
Number: 14252
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14252
File-URL: http://www.nber.org/papers/w14252.pdf
File-Format: application/pdf
Publication-Status: published as Pradeep Chintagunta & Renna Jiang & Ginger Jin, 2009. "Information, learning, and drug diffusion: The case of Cox-2 inhibitors," Quantitative Marketing and Economics (QME), Springer, vol. 7(4), pages 399-443, December.
Abstract: The recent withdrawal of Cox-2 Inhibitors has generated debate on the role of information in drug diffusion: can the market learn the efficacy of new drugs, or does it depend solely on manufacturer advertising and FDA updates? In this study, we use a novel data set to study the diffusion of three Cox-2 Inhibitors ? Celebrex, Vioxx and Bextra ? before the Vioxx withdrawal. Our study has two unique features: first, we observe each patient?s reported satisfaction after consuming a drug. This patient level data set, together with market level data on FDA updates, media coverage, academic articles, and pharmaceutical advertising, allows us to model individual prescription decisions. Second, we distinguish across-patient learning of a drug?s general efficacy from the within-patient learning of the match between a drug and a patient. Our results suggest that prescription choice is sensitive to many sources of information. At the beginning of 2001 and upon Bextra entry in January 2002, doctors held a strong prior belief about the efficacy of Celebrex, Vioxx, and Bextra. As a result, the learning from patient satisfaction is gradual and more concentrated on drug-patient match than on across-patient spillovers. News articles are weakly beneficial for Cox-2 drug sales, but academic articles appear to be detrimental. The impact of FDA updates is close to zero once we control for academic articles, which suggests that FDA updates follow academic articles and therefore deliver little new information to doctors. We find that drug advertising also influences the choice of a patient?s medication. A number of counterfactual experiments are carried out to quantify the influence of information on market shares.
Handle: RePEc:nbr:nberwo:14252
Template-Type: ReDIF-Paper 1.0
Title: Income Tax Provisions Affecting Owner-Occupied Housing: Revenue Costs and Incentive Effects
Classification-JEL: H2; H24; H71; R21
Author-Name: James M. Poterba
Author-Person: ppo19
Author-Name: Todd M. Sinai
Author-Person: psi354
Note: PE
Number: 14253
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14253
File-URL: http://www.nber.org/papers/w14253.pdf
File-Format: application/pdf
Publication-Status: published as Todd Sinai, James Poterba (2011), Revenue Costs and Incentive Effects of the Mortgage Interest Deduction for Owner-Occupied Housing, National Tax Journal, 64 (2), 531 - 564
Abstract: The mortgage interest deduction, the property tax deduction, the unique treatment of capital gains on owner-occupied homes, and the absence of taxation on imputed rent from owner-occupied homes all influence the effective cost of housing services. They also affect federal income tax revenues and the distribution of income tax liabilities. We draw on household-level data from the 2004 Survey of Consumer Finances to analyze how several potential reforms would affect incentives for housing consumption as well as the distribution of income tax burdens. Our analysis recognizes that changing the mortgage interest deduction would induce changes in household financial behavior. We estimate that repealing the mortgage interest deduction in 2003 would have raised income tax revenues by $72.4 billion in the absence of any portfolio adjustments, but by only $61.9 billion if homeowners responded by drawing down a limited set of financial assets to partially replace their mortgage debt. The revenue effects of changing the property tax deduction similarly depend on how state and local governments alter their mix of revenue instruments in response to federal tax reform. Our results underscore the importance of recognizing behavioral responses when calculating the revenue costs of income tax provisions relating to owner-occupied housing.
Handle: RePEc:nbr:nberwo:14253
Template-Type: ReDIF-Paper 1.0
Title: When to Pollute, When to Abate? Intertemporal Permit Use in the Los Angeles NOx Market
Classification-JEL: L5; Q5
Author-Name: Stephen P. Holland
Author-Person: pho374
Author-Name: Michael Moore
Note: EEE
Number: 14254
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14254
File-URL: http://www.nber.org/papers/w14254.pdf
File-Format: application/pdf
Publication-Status: published as Stephen P. Holland & Michael R. Moore, 2012. "When to Pollute, When to Abate? Intertemporal Permit Use in the Los Angeles NOx Market," Land Economics, University of Wisconsin Press, vol. 88(2), pages 275-299.
Abstract: Intertemporal tradability allows an emissions market to reduce abatement costs. We study intertemporal trading of nitrogen oxides permits in the RECLAIM program in Southern California. A theoretical model captures the program's key intertemporal features: two overlapping permit cycles, two compliance cycles for facilities, and tradable permits. We characterize the competitive equilibrium; show that it is cost effective; and demonstrate the firms' incentive to delay abatement, i.e., to trade intertemporally. Using model extensions to explore market design issues, an arbitrage condition implies that the equilibrium is invariant to overlapping compliance cycles, but depends crucially on overlapping permit cycles. We empirically investigate intertemporal trading of permits using panel data on RECLAIM facilities for 1994-2006. Facilities undertake trading by using a considerable proportion of permits of the opposite cycle. We econometrically test two theoretical propositions -- delayed abatement and trading across cycles -- with a difference-in-differences estimator. The results neither contradict nor provide conclusive support of the theory.
Handle: RePEc:nbr:nberwo:14254
Template-Type: ReDIF-Paper 1.0
Title: Learning from Prices: Public Communication and Welfare
Classification-JEL: D83; E40; E58; E61
Author-Name: Manuel Amador
Author-Person: pam50
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: EFG ME
Number: 14255
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14255
File-URL: http://www.nber.org/papers/w14255.pdf
File-Format: application/pdf
Publication-Status: published as Manuel Amador & Pierre-Olivier Weill, 2010. "Learning from Prices: Public Communication and Welfare," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 866 - 907.
Abstract: We study the effect of releasing public information about productivity or monetary shocks when agents learn from nominal prices. While public releases have the benefit of providing new information, they can have the cost of reducing the informational efficiency of the price system. We show that, when agents have private information about monetary shocks, the cost can dominate, in that public releases increase uncertainty about fundamentals. In some cases, public releases can create or eliminate multiple equilibria. Our results are robust to adding velocity shocks, imperfectly observable prices, large idiosyncratic shocks, and introducing a bond market.
Handle: RePEc:nbr:nberwo:14255
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Soft Budget Constraints on Access and Quality in Hospital Care
Classification-JEL: I11; I18
Author-Name: Yu-Chu Shen
Author-Name: Karen Eggleston
Author-Person: peg13
Note: EH
Number: 14256
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14256
File-URL: http://www.nber.org/papers/w14256.pdf
File-Format: application/pdf
Publication-Status: published as Yu-Chu Shen & Karen Eggleston, 2009. "The effect of soft budget constraints on access and quality in hospital care," International Journal of Health Care Finance and Economics, vol 9(2), pages 211-232.
Abstract: Given an increasingly complex web of financial pressures on providers, studies have examined how the hospitals' overall financial health affect different aspects of hospital operation. In our study, we analyze this issue focusing on hospital access and quality by introducing an important aspect of the financial incentives, soft budget constraints (SBC), that takes into account both hospital's current and past financial health as well as their expected financial outlook (i.e., whether there is a sponsoring organization to bail them out). We develop a conceptual framework of SBC by considering the resultant incentives on cost control and quality improvement innovations; and examine the effect of SBC on the following aspects of access and quality: safety net service survival and AMI mortality rates. We find that hospitals with softer budget constraints are less likely to shut down safety net services. In addition, hospitals with softer budget constraints appear to have better mortality outcomes, suggesting that the reduced incentive to engage in cost control innovation as the result of SBC outweighs the dampening effect of quality improvement innovation.
Handle: RePEc:nbr:nberwo:14256
Template-Type: ReDIF-Paper 1.0
Title: Is American Health Care Uniquely Inefficient?
Classification-JEL: I1; I10; I11; I12
Author-Name: Alan M. Garber
Author-Name: Jonathan Skinner
Author-Person: psk23
Note: AG EH PE PR
Number: 14257
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14257
File-URL: http://www.nber.org/papers/w14257.pdf
File-Format: application/pdf
Publication-Status: published as Alan M. Garber & Jonathan Skinner, 2008. "Is American Health Care Uniquely Inefficient?," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 27-50, Fall.
Abstract: The U.S. health system has been described as the most competitive, heterogeneous, inefficient, fragmented, and advanced system of care in the world. In this paper, we consider two questions: First, is the U.S. health care system productively efficient relative to other wealthy countries, in the sense of producing better health for a given bundle of hospital beds, physicians, nurses, and other factor inputs? Second, is the U.S. allocatively efficient relative to other countries, in the sense of providing highly valued care to consumers? For both questions, the answer is most likely no. Although no country can claim to have eliminated inefficiency, the U.S. has fragmented care, high administrative costs, and stands out with regard to heterogeneity in treatment because of race, income, and geography. The U.S. health care system is also more likely to pay for diagnostic tests, treatments, and other forms of care before effectiveness is established and with little consideration of the value they provide. A number of proposed reforms that are designed to ameliorate shortcomings of the U.S. health care system, such as quality improvement initiatives and coverage expansions, are unlikely by themselves to reduce expenditures. Addressing allocative inefficiency is a far more difficult task but central to controlling costs.
Handle: RePEc:nbr:nberwo:14257
Template-Type: ReDIF-Paper 1.0
Title: Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade
Classification-JEL: D8; L51; Q54; Q58
Author-Name: Brian C. Murray
Author-Person: pmu673
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: William A. Pizer
Author-Person: ppi108
Note: EEE
Number: 14258
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14258
File-URL: http://www.nber.org/papers/w14258.pdf
File-Format: application/pdf
Publication-Status: published as Brian C. Murray & Richard G. Newell & William A. Pizer, 2009. "Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 3(1), pages 84-103, Winter.
Abstract: On efficiency grounds, the economics community has to date tended to emphasize price-based policies to address climate change -- such as taxes or a "safety-valve" price ceiling for cap-and-trade -- while environmental advocates have sought a more clear quantitative limit on emissions. This paper presents a simple modification to the idea of a safety valve: a quantitative limit that we call the allowance reserve. Importantly, this idea may bridge the gap between competing interests and potentially improve efficiency relative to tax or other price-based policies. The last point highlights the deficiencies in several previous studies of price and quantity controls for climate change that do not adequately capture the dynamic opportunities within a cap-and-trade system for allowance banking, borrowing, and intertemporal arbitrage in response to unfolding information.
Handle: RePEc:nbr:nberwo:14258
Template-Type: ReDIF-Paper 1.0
Title: The State of Macro
Classification-JEL: E0; E2; E3; E4; E50
Author-Name: Olivier J. Blanchard
Author-Person: pbl2
Note: EFG
Number: 14259
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14259
File-URL: http://www.nber.org/papers/w14259.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Blanchard, 2009. "The State of Macro," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 209-228, 05.
Abstract: For a long while after the explosion of macroeconomics in the 1970s, the field looked like a battlefield. Over time however, largely because facts do not go away, a largely shared vision both of fluctuations and of methodology has emerged. Not everything is fine. Like all revolutions, this one has come with the destruction of some knowledge, and suffers from extremism and herding. None of this deadly however. The state of macro is good. The first section sets the stage with a brief review of the past. The second argues that there has been broad convergence in vision, and the third reviews the specifics. The fourth focuses on convergence in methodology. The last looks at current challenges.
Handle: RePEc:nbr:nberwo:14259
Template-Type: ReDIF-Paper 1.0
Title: On the Need for a New Approach to Analyzing Monetary Policy
Classification-JEL: E5; E52; E58; E6
Author-Name: Andrew Atkeson
Author-Person: pat52
Author-Name: Patrick J. Kehoe
Author-Person: pke4
Note: EFG
Number: 14260
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14260
File-URL: http://www.nber.org/papers/w14260.pdf
File-Format: application/pdf
Publication-Status: published as On the Need for a New Approach to Analyzing Monetary Policy, Andrew Atkeson, Patrick J. Kehoe. in NBER Macroeconomics Annual 2008, Volume 23, Acemoglu, Rogoff, and Woodford. 2009
Abstract: We present a pricing kernel that summarizes well the main features of the dynamics of interest rates and risk in postwar U.S. data and use it to uncover how the pricing kernel has moved with the short rate in this data. Our findings imply that standard monetary models miss an essential link between the central bank instrument and the economic activity that monetary policy is intended to affect and thus we call for a new approach to monetary policy analysis. We sketch a new approach using an economic model based on our pricing kernel. The model incorporates the key relationships between policy and risk movements in an unconventional way: the central bank's policy changes are viewed as primarily intended to compensate for exogenous business cycle fluctuations in risk which threaten to push inflation off target. This model, while an improvement on standard models, is considered just a starting point for their revision. It leads to critical questions that researchers need to answer as they continue to revise their approach to monetary policy analysis.
Handle: RePEc:nbr:nberwo:14260
Template-Type: ReDIF-Paper 1.0
Title: Ability, Gender, and Performance Standards: Evidence from Academic Probation
Classification-JEL: D80; I20
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Nicholas J. Sanders
Author-Person: psa898
Author-Name: Philip Oreopoulos
Author-Person: por38
Note: CH ED LS
Number: 14261
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14261
File-URL: http://www.nber.org/papers/w14261.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & Nicholas J. Sanders & Philip Oreopoulos, 2010. "Ability, Gender, and Performance Standards: Evidence from Academic Probation," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 95-117, April.
Abstract: We use a regression discontinuity design to examine students' responses to the negative incentive brought on by being placed on academic probation. Consistent with a model of introducing performance standards in which agents respond differently based on ability, we find that being placed on probation at the end of the first year discourages some students from returning to school while improving the performance of those who return. Contrary to the predictions of the model when ability is known, we find that heterogeneous discouragement effects result in high ability students having a greater overall dropout rate near the cutoff than lower ability students. The result can be explained by extending the model to allow for the performance standard to also affect self confidence (ability expectations). We also consider effects by gender and find that being placed on probation more than doubles the probability that men drop out but has no such discouragement effect for women.
Handle: RePEc:nbr:nberwo:14261
Template-Type: ReDIF-Paper 1.0
Title: Organizations and Trade
Classification-JEL: D23; E25; F10; F23; L23
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI
Number: 14262
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14262
File-URL: http://www.nber.org/papers/w14262.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antràs & Esteban Rossi-Hansberg, 2009. "Organizations and Trade," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 43-64, 05.
Abstract: We survey an emerging literature at the intersection of organizational economics and international trade. We argue that a proper modelling of the organizational aspects of production provides valuable insights on the aggregate workings of the world economy. In reviewing the literature, we describe certain predictions of standard models that are affected or even overturned when organizational decisions are brought into the analysis. We also suggest potentially fruitful areas for future research.
Handle: RePEc:nbr:nberwo:14262
Template-Type: ReDIF-Paper 1.0
Title: Tax Expenditure Estimation and Reporting: A Critical Review
Classification-JEL: H20
Author-Name: Rosanne Altshuler
Author-Person: pal34
Author-Name: Robert D. Dietz
Author-Person: pdi222
Note: PE
Number: 14263
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14263
File-URL: http://www.nber.org/papers/w14263.pdf
File-Format: application/pdf
Abstract: We examine the measurement of tax expenditures, as well as review issues concerning the classification of tax expenditures generally. We use calculations from NBER's TAXSIM to illustrate some of the problems with the current methodology for estimating tax expenditures. Unlike most previous work on the topic, we focus on how features of the current tax system including the alternative minimum tax and sunset rules complicate and compromise the value of information provided by the tax expenditure budget.
Handle: RePEc:nbr:nberwo:14263
Template-Type: ReDIF-Paper 1.0
Title: Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s-2000s
Classification-JEL: E65; F10; F13; F43; F53; N10; N70; O40
Author-Name: Antoni Estevadeordal
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: EFG IFM ITI
Number: 14264
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14264
File-URL: http://www.nber.org/papers/w14264.pdf
File-Format: application/pdf
Publication-Status: published as Antoni Estevadeordal & Alan M. Taylor, 2013. "Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s–2000s," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1669-1690, December.
Abstract: According to the Washington Consensus, developing countries? growth would benefit from a reduction in tariffs and other barriers to trade. But a backlash against this view now suggests that trade policies have little or no impact on growth. If "getting policies right" is wrong or infeasible, this leaves only the more tenuous objective of "getting institutions right" (Easterly 2005, Rodrik 2006). However, the empirical basis for judging recent trade reforms is weak. Econometrics are mostly ad hoc; results are typically not judged against models; trade policies are poorly measured (or not measured at all, as when trade volumes are spuriously used); and the most influential studies in the literature are based on pre-1990 experience (which predates the "Great Liberalization" in developing countries which followed the GATT Uruguay Round). We address all of these concerns -- by using a model-based analysis which highlights tariffs on capital and intermediate goods; by compiling new disaggregated tariff measures to empirically test the model; and by employing a treatment-and-control empirical analysis of pre- versus post-1990 performance of liberalizing and nonliberalizing countries. We find evidence that a specific treatment, liberalizing tariffs on imported capital and intermediate goods, did lead to faster GDP growth, and by a margin consistent with theory (about 1 percentage point per annum). Endogeneity problems are considered and other observations are consistent with the proposed mechanism: changes to other tariffs, e.g. on consumption goods, though collinear with general tariffs reforms, are more weakly correlated with growth outcomes; and the treatment and control groups display different behavior of investment prices and quantities, and capital flows.
Handle: RePEc:nbr:nberwo:14264
Template-Type: ReDIF-Paper 1.0
Title: Selection Bias in College Admissions Test Scores
Classification-JEL: C24; I2; J24
Author-Name: Melissa Clark
Author-Name: Jesse Rothstein
Author-Person: pro180
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH LS
Number: 14265
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14265
File-URL: http://www.nber.org/papers/w14265.pdf
File-Format: application/pdf
Publication-Status: published as Clark, Melissa & Rothstein, Jesse & Schanzenbach, Diane Whitmore, 2009. "Selection bias in college admissions test scores," Economics of Education Review, Elsevier, vol. 28(3), pages 295-307, June.
Abstract: Data from college admissions tests can provide a valuable measure of student achievement, but the non-representativeness of test-takers is an important concern. We examine selectivity bias in both state-level and school-level SAT and ACT averages. The degree of selectivity may differ importantly across and within schools, and across and within states. To identify within-state selectivity, we use a control function approach that conditions on scores from a representative test. Estimates indicate strong selectivity of test-takers in "ACT states," where most college-bound students take the ACT, and much less selectivity in SAT states. To identify within- and between-school selectivity, we take advantage of a policy reform in Illinois that made taking the ACT a graduation requirement. Estimates based on this policy change indicate substantial positive selection into test participation both across and within schools. Despite this, school-level averages of observed scores are extremely highly correlated with average latent scores, as across-school variation in sample selectivity is small relative to the underlying signal. As a result, in most contexts the use of observed school mean test scores in place of latent means understates the degree of between-school variation in achievement but is otherwise unlikely to lead to misleading conclusions.
Handle: RePEc:nbr:nberwo:14265
Template-Type: ReDIF-Paper 1.0
Title: Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?
Classification-JEL: D13; J13
Author-Name: Larry E. Jones
Author-Person: pjo88
Author-Name: Alice Schoonbroodt
Author-Name: Michèle Tertilt
Author-Person: pte114
Note: EFG
Number: 14266
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14266
File-URL: http://www.nber.org/papers/w14266.pdf
File-Format: application/pdf
Publication-Status: published as Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?, Larry E. Jones, Alice Schoonbroodt, Michèle Tertilt. in Demography and the Economy, Shoven. 2011
Abstract: In this chapter we revisit the relationship between income and fertility. There is overwhelming empirical evidence that fertility is negatively related to income in most countries at most times. Several theories have been proposed in the literature to explain this somewhat puzzling fact. The most common one is based on the opportunity cost of time being higher for individuals with higher earnings. Alternatively, people might differ in their desire to procreate and accordingly some people invest more in children and less in market-specific human capital and thus have lower earnings. We revisit these and other possible explanations. We find that these theories are not as robust as is commonly believed. That is, several special assumptions are needed to generate the negative relationship. Not all assumptions are equally plausible. Such findings will be useful to distinguish alternative theories. We conclude that further research along these lines is needed.
Handle: RePEc:nbr:nberwo:14266
Template-Type: ReDIF-Paper 1.0
Title: The Distribution of Congressional Spending During the American Revolution, 1775-1780: The Problem of Geographic Balance
Classification-JEL: E62; H60; H77; N11; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 14267
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14267
File-URL: http://www.nber.org/papers/w14267.pdf
File-Format: application/pdf
Publication-Status: published as “The Distribution of Congressional Spending During the American Revolution, 1775-1780: The Problem of Geographic Balance, ” in Stephen Conway and Rafael Torres Sánchez, eds.,The Spending of the States—Military Expenditure During the Long Eighteenth Century: Patterns, Organisations, and Consequences, 1650-1815, pp. 257-284. Saabrücken, Germany: VDM Verlag Dr. Müller GmbH & Co. KG, 2011. [ISBN: 978-3-639-36623-5]
Abstract: Resources to fight the War for Independence from Great Britain (1775-1783) were to be provided to the U.S. Congress by the individual states based on each state's population share in the united colonies. Congressional spending, however, largely flowed to where the theater of war was located. Thus a geographic imbalance in revenue and spending arose. Because much of the spending was through issuing paper money, geographic variation in inflation as well as in general economic activity resulted. This in turn affected the relative strength of each state's attachment to the union with ramifications on maintaining political unity.
Handle: RePEc:nbr:nberwo:14267
Template-Type: ReDIF-Paper 1.0
Title: Culture, Context, and the Taste for Redistribution
Classification-JEL: D72; H23; Z10
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: Monica Singhal
Author-Person: psi159
Note: PE POL
Number: 14268
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14268
File-URL: http://www.nber.org/papers/w14268.pdf
File-Format: application/pdf
Publication-Status: published as Erzo F. P. Luttmer & Monica Singhal, 2011. "Culture, Context, and the Taste for Redistribution," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 157-79, February.
Abstract: Is culture an important determinant of preferences for redistribution? To separate the effect of culture from the effect of the economic and institutional environment ("context"), we relate immigrants' preferences for redistribution to the average preference in their birth countries, controlling extensively for individual characteristics and country-of-residence fixed effects. We find a strong positive relationship. This cultural effect is larger for non-voters, those with shorter tenure in the country of residence, and those who move to countries with a large number of immigrants from their own birth countries. Immigrants from countries with a higher preference for redistribution are also more likely to vote for a more pro-redistribution political party. The effect of culture persists strongly into the second generation.
Handle: RePEc:nbr:nberwo:14268
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Volatility and Stock Market Volatility, Worldwide
Classification-JEL: E0; G1
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Kamil Yilmaz
Author-Person: pyi43
Note: AP EFG IFM
Number: 14269
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14269
File-URL: http://www.nber.org/papers/w14269.pdf
File-Format: application/pdf
Abstract: Notwithstanding its impressive contributions to empirical financial economics, there remains a significant gap in the volatility literature, namely its relative neglect of the connection between macroeconomic fundamentals and asset return volatility. We progress by analyzing a broad international cross section of stock markets covering approximately forty countries. We find a clear link between macroeconomic fundamentals and stock market volatilities, with volatile fundamentals translating into volatile stock markets.
Handle: RePEc:nbr:nberwo:14269
Template-Type: ReDIF-Paper 1.0
Title: Individual Laboratory-Measured Discount Rates Predict Field Behavior
Classification-JEL: C91; D9; I1
Author-Name: Christopher F. Chabris
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Carrie L. Morris
Author-Name: Jonathon P. Schuldt
Author-Name: Dmitry Taubinsky
Note: AG EH
Number: 14270
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14270
File-URL: http://www.nber.org/papers/w14270.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Chabris & David Laibson & Carrie Morris & Jonathon Schuldt & Dmitry Taubinsky, 2008. "Individual laboratory-measured discount rates predict field behavior," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 237-269, December.
Abstract: We estimate discount rates of 555 subjects using a laboratory task and find that these individual discount rates predict inter-individual variation in field behaviors (e.g., exercise, BMI, smoking). The correlation between the discount rate and each field behavior is small: none exceeds 0.28 and many are near 0. However, the discount rate has at least as much predictive power as any variable in our dataset (e.g., sex, age, education). The correlation between the discount rate and field behavior rises when field behaviors are aggregated: these correlations range from 0.09-0.38. We present a model that explains why specific intertemporal choice behaviors are only weakly correlated with discount rates, even though discount rates robustly predict aggregates of intertemporal decisions.
Handle: RePEc:nbr:nberwo:14270
Template-Type: ReDIF-Paper 1.0
Title: Days of Haze: Environmental Information Disclosure and Intertemporal Avoidance Behavior
Classification-JEL: D80; I18; Q53
Author-Name: Joshua Graff Zivin
Author-Person: pgr314
Author-Name: Matthew Neidell
Author-Person: pne362
Note: EEE EH
Number: 14271
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14271
File-URL: http://www.nber.org/papers/w14271.pdf
File-Format: application/pdf
Publication-Status: published as Graff Zivin, Joshua & Neidell, Matthew, 2009. "Days of haze: Environmental information disclosure and intertemporal avoidance behavior," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 119-128, September.
Abstract: In this paper, we investigate the dynamics of informational regulatory approaches by analyzing the impact of smog alerts issued on consecutive days on discretionary outdoor activities in Southern California. Short-run adjustments to transitory risk entail costs that are likely to influence the set of evasive actions pursued by those at risk. Our results confirm that the cost of intertemporally substituting activities is increasing over time: when alerts are issued on two successive days, any response on the first day has largely disappeared by the second day. Small reprieves from alerts, however, reset these costs. Our findings imply that a time-varying decision rule that accounts for multiple day air quality forecasts may improve social welfare.
Handle: RePEc:nbr:nberwo:14271
Template-Type: ReDIF-Paper 1.0
Title: Complementarity of Shared Compensation and Decision-Making Systems: Evidence from the American Labor Market
Classification-JEL: J33; J54; L23; L25
Author-Name: Arindrajit Dube
Author-Person: pdu263
Author-Name: Richard Freeman
Author-Person: pfr23
Note: LS
Number: 14272
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14272
File-URL: http://www.nber.org/papers/w14272.pdf
File-Format: application/pdf
Publication-Status: published as Arindrajit Dube & Richard B. Freeman, 2010. "Complementarity of Shared Compensation and Decision-Making Systems: Evidence from the American Labor Market," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 167-199 National Bureau of Economic Research, Inc.
Abstract: This paper examines the relationship between shared capitalist modes of pay and shared modes of decision-making via employee involvement and related committees and between them and measures of productivity and worker well-being in two data sets: the employee based Worker Participation and Representation Survey and the California Establishment Survey. It finds in both data sets that the forms of shared compensation are complementary in the sense that they are more likely to be found together than if firms chose them separately; that shared compensation systems are positively associated with shared decision-making; and that combining shared compensation systems and employee involvement has greater impacts on outcomes than each system by itself.
Handle: RePEc:nbr:nberwo:14272
Template-Type: ReDIF-Paper 1.0
Title: Racial Discrimination and Competition
Classification-JEL: D3; D43; G21; G28; J31; J7
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Alexey Levkov
Author-Name: Yona Rubinstein
Author-Person: pru68
Note: CF LS
Number: 14273
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14273
File-URL: http://www.nber.org/papers/w14273.pdf
File-Format: application/pdf
Abstract: This paper assesses the impact of competition on racial discrimination. The dismantling of inter- and intrastate bank restrictions by U.S. states from the mid-1970s to the mid-1990s reduced financial market imperfections, lowered entry barriers facing nonfinancial firms, and boosted the rate of new firm formation. We use bank deregulation to identify an exogenous intensification of competition in the nonfinancial sector, and evaluate its impact on the racial wage gap, which is that component of the black-white wage differential unexplained by Mincerian characteristics. We find that bank deregulation reduced the racial wage gap by spurring the entry of non- financial firms. Consistent with taste-based theories, competition reduced both the racial wage gap and racial segregation in the workplace, particularly in states with a comparatively high degree of racial prejudice, where competition-enhancing bank deregulation eliminated about one-quarter of the racial wage gap after five years.
Handle: RePEc:nbr:nberwo:14273
Template-Type: ReDIF-Paper 1.0
Title: Like Father, Like Son? A Note on the Intergenerational Transmission of IQ Scores
Classification-JEL: I0; J0; J1
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH ED LS
Number: 14274
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14274
File-URL: http://www.nber.org/papers/w14274.pdf
File-Format: application/pdf
Publication-Status: published as Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2009. "Like father, like son? A note on the intergenerational transmission of IQ scores," Economics Letters, Elsevier, vol. 105(1), pages 138-140, October.
Abstract: More able parents tend to have more able children. While few would question the validity of this statement, there is little large-scale evidence on the intergenerational transmission of IQ scores. Using a larger and more comprehensive dataset than previous work, we are able to estimate the intergenerational correlation in IQ scores, examining not just average correlations but also how this relationship varies for different subpopulations. We find that there is substantial intergenerational transmission of IQ scores; an increase in father's IQ at age 18 of 10% is associated with a 3.2% increase in son's IQ at the same age. This relationship holds true no matter how we break the data. This effect is much larger than our estimated elasticity of intergenerational transmission of income of approximately .2.
Handle: RePEc:nbr:nberwo:14274
Template-Type: ReDIF-Paper 1.0
Title: Mismatch in Law School
Classification-JEL: I21; J15; K30
Author-Name: Jesse Rothstein
Author-Person: pro180
Author-Name: Albert Yoon
Note: CH ED LE LS
Number: 14275
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14275
File-URL: http://www.nber.org/papers/w14275.pdf
File-Format: application/pdf
Abstract: An important criticism of race-based higher education admission preferences is that they may hurt minority students who attend more selective schools than they would in the absence of such preferences. We categorize the non-experimental research designs available for the study of so-called "mismatch" effects and evaluate the likely biases in each. We select two comparisons and use them to examine mismatch effects in law school. We find no evidence of mismatch effects on any students' employment outcomes or on the graduation or bar passage rates of black students with moderate or strong entering credentials. What evidence there is for mismatch comes from less-qualified black students who typically attend second- or third-tier schools. Many of these students would not have been admitted to any law school without preferences, however, and the resulting sample selection prevents strong conclusions.
Handle: RePEc:nbr:nberwo:14275
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action in Law School Admissions: What Do Racial Preferences Do?
Classification-JEL: I2; J15; K30
Author-Name: Jesse Rothstein
Author-Person: pro180
Author-Name: Albert H. Yoon
Note: CH ED LE LS
Number: 14276
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14276
File-URL: http://www.nber.org/papers/w14276.pdf
File-Format: application/pdf
Abstract: The Supreme Court has held repeatedly that race-based preferences in public university admissions are constitutional. But debates over the wisdom of affirmative action continue. Opponents of these policies argue that preferences are detrimental to minority students -- that by placing these students in environments that are too competitive, affirmative action hurts their academic and career outcomes. This article examines the so-called "mismatch" hypothesis in the context of law school admissions. We discuss the existing scholarship on mismatch, identifying methodological limitations of earlier attempts to measure the effects of affirmative action. Using a simpler, more robust analytical strategy, we find that the data are inconsistent with large mismatch effects, particularly with respect to employment outcomes. While moderate mismatch effects are possible, they are concentrated among the students with the weakest entering academic credentials. To put our estimates in context, we simulate admissions under race-blind rules. Eliminating affirmative action would dramatically reduce the number of black law students, particularly at the most selective schools. Many potentially successful black law students would be excluded, far more than the number who would be induced to pass the bar exam by the elimination of mismatch effects. Accordingly, we find that eliminating affirmative action would dramatically reduce the production of black lawyers.
Handle: RePEc:nbr:nberwo:14276
Template-Type: ReDIF-Paper 1.0
Title: Cognitive and Non-Cognitive Peer Effects in Early Education
Classification-JEL: I21; I28; J13
Author-Name: Matthew Neidell
Author-Person: pne362
Author-Name: Jane Waldfogel
Note: CH ED EH PE
Number: 14277
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14277
File-URL: http://www.nber.org/papers/w14277.pdf
File-Format: application/pdf
Publication-Status: published as Neidell, Matthew and Jane Waldfogel. “Cognitive and Non-Cognitive Peer Effects in Early Education,” Review of Economics and Statistics, 92(3), 2010.
Abstract: We examine peer effects in early education by estimating value added models with school fixed effects that control extensively for individual, family, peer, and teacher characteristics to account for the endogeneity of peer group formation. We find statistically significant and robust spillover effects from preschool on math and reading outcomes, but statistically insignificant effects on various behavioral and social outcomes. Of the behavioral and social effects explored, we find that peer externalizing problems, which most likely capture classroom disturbance, hinder cognitive outcomes. Our estimates imply that ignoring spillover effects significantly understates the social returns to preschool.
Handle: RePEc:nbr:nberwo:14277
Template-Type: ReDIF-Paper 1.0
Title: Long Term Persistence
Classification-JEL: O10; O43; P16
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: POL
Number: 14278
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14278
File-URL: http://www.nber.org/papers/w14278.pdf
File-Format: application/pdf
Publication-Status: published as Luigi Guiso & Paola Sapienza & Luigi Zingales, 2016. "Long-Term Persistence," Journal of the European Economic Association, European Economic Association, vol. 14(6), pages 1401-1436, December.
Publication-Status: published as Luigi Guiso & Paola Sapienza & Luigi Zingales, 2016. "LONG-TERM PERSISTENCE," Journal of the European Economic Association, vol 14(6), pages 1401-1436.
Abstract: Is social capital long lasting? Does it affect long term economic performance? To answer these questions we test Putnam's conjecture that today marked differences in social capital between the North and South of Italy were due to the culture of independence fostered by the free city-states experience in the North of Italy at the turn of the first millennium. We show that the medieval experience of independence has an impact on social capital within the North, even when we instrument for the probability of becoming a city-state with historical factors (such as the Etruscan origin of the city and the presence of a bishop in year 1,000). More importantly, we show that the difference in social capital among towns that in the Middle Ages had the characteristics to become independent and towns that did not exists only in the North (where most of these towns became independent) and not in the South (where the power of the Norman kingdom prevented them from doing so). Our difference in difference estimates suggest that at least 50% of the North-South gap in social capital is due to the lack of a free city-state experience in the South.
Handle: RePEc:nbr:nberwo:14278
Template-Type: ReDIF-Paper 1.0
Title: "Might Not Be a Tomorrow": A Multi-Methods Approach to Anticipated Early Death and Youth Crime
Classification-JEL: K0; K42
Author-Name: Timothy Brezina
Author-Name: Erdal Tekin
Author-Person: pte12
Author-Name: Volkan Topalli
Note: CH EH LE
Number: 14279
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14279
File-URL: http://www.nber.org/papers/w14279.pdf
File-Format: application/pdf
Publication-Status: published as “Might Not Be a Tomorrow: Anticipated Early Death and Youth Crime,” with Timothy Brezina and Volkan Topalli. Criminology , 48: 1024 - 1049, 2009.
Abstract: A number of researchers point to the anticipation of early death, or a sense of "futurelessness," as a contributing factor to youth crime and violence. Young people who perceive a high probability of early death, it is argued, may have little reason to delay gratification for the promise of future benefits, as the future itself is discounted. Consequently, these young people tend to pursue high-risk behaviors associated with immediate rewards, including crime and violence. Although existing studies lend empirical support to these arguments and show a statistical relationship between anticipated early death and youth crime, this support remains tentative. Moreover, a number of questions remain regarding the interpretation of this relationship, the meanings that offenders attach to the prospect of early death, and the causal mechanisms that link anticipated early death to youth crime. In this paper, we address the limitations of previous studies using a multi-methods approach, involving the analyses of national survey data and in-depth interviews with active street offenders.
Handle: RePEc:nbr:nberwo:14279
Template-Type: ReDIF-Paper 1.0
Title: Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks
Classification-JEL: E58; G21
Author-Name: Rajkamal Iyer
Author-Name: Manju Puri
Author-Person: ppu153
Note: CF ME
Number: 14280
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14280
File-URL: http://www.nber.org/papers/w14280.pdf
File-Format: application/pdf
Publication-Status: published as Rajkamal Iyer & Manju Puri, 2012. "Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks," American Economic Review, vol 102(4), pages 1414-1445.
Abstract: We use a unique, new, database to examine micro depositor level data for a bank that faced a run. We use minute-by-minute depositor withdrawal data to understand the effectiveness of deposit insurance, the role of social networks, and the importance of bank-depositor relationships in influencing depositor propensity to run. We employ methods from the epidemiology literature which examine how diseases spread to estimate transmission probabilities of depositors running, and the significant underlying factors. We find that deposit insurance is only partially effective in preventing bank runs. Further, our results suggest that social network effects are important but are mitigated by other factors, in particular the length and depth of the bank-depositor relationship. Depositors with longer relationships and those who have availed of loans from a bank are less likely to run during a crisis, suggesting that cross-selling acts not just as a revenue generator but also as a complementary insurance mechanism for the bank. Finally, we find there are long term effects of a solvent bank run in that depositors who run do not return back to the bank. Our results help understand the underlying dynamics of bank runs and hold important policy implications.
Handle: RePEc:nbr:nberwo:14280
Template-Type: ReDIF-Paper 1.0
Title: Preserving Slave Families for Profit: Traders' Incentives and Pricing in the New Orleans Slave Market
Classification-JEL: N3; N31
Author-Name: Charles Calomiris
Author-Person: pca421
Author-Name: Jonathan Pritchett
Author-Person: ppr258
Note: DAE LS
Number: 14281
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14281
File-URL: http://www.nber.org/papers/w14281.pdf
File-Format: application/pdf
Publication-Status: published as Calomiris, Charles W. & Pritchett, Jonathan B., 2009. "Preserving Slave Families for Profit: Traders' Incentives and Pricing in the New Orleans Slave Market," The Journal of Economic History, Cambridge University Press, vol. 69(04), pages 986-1011, December.
Abstract: We investigate the determinants of slave family discounts, using data from the New Orleans slave market. We find large price discounts for families which cannot be explained by scale effects, childcare costs, legal restrictions, or transport costs. Because family members cared for each other, sellers found it advantageous to keep some families together. Evidence from the manifests of ships carrying slaves to be sold in New Orleans provides direct evidence for our model of selectivity bias in explaining slave family discounts. Children likely to have been shipped with their mothers are 1-2 inches shorter than other children.
Handle: RePEc:nbr:nberwo:14281
Template-Type: ReDIF-Paper 1.0
Title: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox
Classification-JEL: D6; I3; J1
Author-Name: Betsey Stevenson
Author-Person: pst145
Author-Name: Justin Wolfers
Author-Person: pwo9
Note: EFG LS ME
Number: 14282
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14282
File-URL: http://www.nber.org/papers/w14282.pdf
File-Format: application/pdf
Publication-Status: published as Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
Abstract: The "Easterlin paradox" suggests that there is no link between a society's economic development and its average level of happiness. We re-assess this paradox analyzing multiple rich datasets spanning many decades. Using recent data on a broader array of countries, we establish a clear positive link between average levels of subjective well-being and GDP per capita across countries, and find no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. We show that the estimated relationship is consistent across many datasets and is similar to the relationship between subject well-being and income observed within countries. Finally, examining the relationship between changes in subjective well-being and income over time within countries we find economic growth associated with rising happiness. Together these findings indicate a clear role for absolute income and a more limited role for relative income comparisons in determining happiness.
Handle: RePEc:nbr:nberwo:14282
Template-Type: ReDIF-Paper 1.0
Title: Criminal Sentencing in Nineteenth Century Pennsylvania
Classification-JEL: K14; K42; N41
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: DAE LE
Number: 14283
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14283
File-URL: http://www.nber.org/papers/w14283.pdf
File-Format: application/pdf
Publication-Status: published as "Criminal Sentencing in Nineteenth Century Pennsylvania." Explorations in Economic History 46:3 (July 2009), 287-298.
Abstract: How law is interpreted and enforced at a particular historical moment reflects contemporary social concerns and prejudices. This paper investigates the nature of criminal sentencing in mid-nineteenth-century Pennsylvania. It finds that extralegal factors, namely place of conviction and several personal characteristics, were important determinants of sentence length. The observed disparities in the mid-nineteenth century, however, are different than modern disparities. Instead of longer sentences, African Americans and recent immigrants tended to receive shorter sentences, whereas more affluent offenders received longer sentences. The results are consistent with other interpretations of the period as the "era of the common man."
Handle: RePEc:nbr:nberwo:14283
Template-Type: ReDIF-Paper 1.0
Title: Bayesian Averaging, Prediction and Nonnested Model Selection
Classification-JEL: C14; C52
Author-Name: Han Hong
Author-Name: Bruce Preston
Author-Person: ppr134
Note: TWP
Number: 14284
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14284
File-URL: http://www.nber.org/papers/w14284.pdf
File-Format: application/pdf
Publication-Status: published as Hong, Han & Preston, Bruce, 2012. "Bayesian averaging, prediction and nonnested model selection," Journal of Econometrics, Elsevier, vol. 167(2), pages 358-369.
Abstract: This paper studies the asymptotic relationship between Bayesian model averaging and post-selection frequentist predictors in both nested and nonnested models. We derive conditions under which their difference is of a smaller order of magnitude than the inverse of the square root of the sample size in large samples. This result depends crucially on the relation between posterior odds and frequentist model selection criteria. Weak conditions are given under which consistent model selection is feasible, regardless of whether models are nested or nonnested and regardless of whether models are correctly specified or not, in the sense that they select the best model with the least number of parameters with probability converging to 1. Under these conditions, Bayesian posterior odds and BICs are consistent for selecting among nested models, but are not consistent for selecting among nonnested models.
Handle: RePEc:nbr:nberwo:14284
Template-Type: ReDIF-Paper 1.0
Title: Offshoring and the Role of Trade Agreements
Classification-JEL: D02; F02; F13; F5
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 14285
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14285
File-URL: http://www.nber.org/papers/w14285.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antr�s & Robert W. Staiger, 2012. "Offshoring and the Role of Trade Agreements," American Economic Review, American Economic Association, vol. 102(7), pages 3140-83, December.
Abstract: The rise of offshoring of intermediate inputs raises important questions for commercial policy. Do the distinguishing features of offshoring introduce novel reasons for trade policy intervention? Does offshoring create new problems of global policy cooperation whose solutions require international agreements with novel features? Can trade agreements that are designed to address problems that arise when trade predominantly takes the form of the exchange of final goods be expected to perform in a world where offshoring is prevalent? In this paper we provide answers to these questions, and thereby initiate the study of trade agreements in the presence of offshoring. We do so by deriving the Nash and internationally efficient trade policy choices of governments in an environment in which some trade flows involve the exchange of customized inputs, contracts governing these transactions are incomplete, and the matching between final-good producers and input suppliers may involve search frictions. By characterizing the differences between Nash and internationally efficient policies in this environment, and by comparing these differences to those that would arise in the absence of offshoring of customized inputs, we seek to understand the implications of offshoring for the role of trade agreements. Our findings indicate that the rise of offshoring is likely to complicate the task of trade agreements, because in the presence of offshoring, (i) the mechanism by which countries can shift the costs of intervention on to their trading partners is more complicated and extends to a wider set of policies than is the case when offshoring is not present, and (ii) because the underlying problem that a trade agreement must address in the presence of offshoring varies with the political preferences of member governments. As a consequence, the increasing prevalence of offshoring is likely to make it increasingly difficult for governments to rely on simple and general rules -- such as reciprocity and non-discrimination -- to help them solve their trade-related problems.
Handle: RePEc:nbr:nberwo:14285
Template-Type: ReDIF-Paper 1.0
Title: Trade, Technology, and the Environment: Why Have Poor Countries Regulated Sooner?
Classification-JEL: F18; O33; Q53; Q55; Q56; Q58
Author-Name: Mary Lovely
Author-Person: plo347
Author-Name: David Popp
Note: EEE PR
Number: 14286
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14286
File-URL: http://www.nber.org/papers/w14286.pdf
File-Format: application/pdf
Publication-Status: published as “Trade, Technology, and the Environment: Does Access to Technology Promote Environmental Regulation,” Journal of Environmental Economics and Management, January 2011, 61(1), 16-35 , (with Mary Lovely).
Abstract: Countries who adopted regulation of coal-fired power plants after 1980 generally did so at a much lower level of per-capita income than did early adopters -- poor countries regulated sooner. This phenomenon suggests that pioneering adopters of environmental regulation provide an advantage to countries adopting these regulations later, presumably through advances in technology made by these first adopters. Focusing specifically on regulation of coal-fired power plants, we ask to what extent the availability of new technology influences the adoption of new environmental regulation. We build a general equilibrium model of an open economy to identify the political-economy determinants of the decision to regulate emissions. Using a newly-created data set of SO2 and NOX regulations for coal-fired power plants and a patent-based measure of the technology frontier, we test the model's predictions using a hazard regression of the diffusion of environmental regulation across countries. Our findings support the hypothesis that international economic integration eases access to environmentally friendly technologies and leads to earlier adoption, ceteris paribus, of regulation in developing countries. By limiting firms' ability to burden shift, however, openness may raise opposition to regulation. Our results suggest that domestic trade protection allows costs to be shifted to domestic consumers while large countries can shift costs to foreign consumers, raising the likelihood of adoption. Other political economy factors, such as the quality of domestic coal and election years, are also important determinants.
Handle: RePEc:nbr:nberwo:14286
Template-Type: ReDIF-Paper 1.0
Title: Public or Private Production of Food Safety: What Do U.S. Consumers Want?
Classification-JEL: H42; Q18
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Carol Mansfield
Author-Name: Aaron Strong
Note: EEE
Number: 14287
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14287
File-URL: http://www.nber.org/papers/w14287.pdf
File-Format: application/pdf
Abstract: This paper reports estimates of consumers' preferences for plans to improve food safety. The plans are distinguished based on whether they address the ex ante risk of food borne illness or the ex post effects of the illness. They are also distinguished based on whether they focus on a public good -- reducing risk of illness for all consumers or allowing individual households to reduce their private risks of contracting a food borne pathogen. Based on a National Survey conducted in 2007 using the Knowledge Network internet panel our findings indicate consumers favor ex ante risk reductions and are willing to pay approximately $250 annually to reduce the risk of food borne illness. Moreover, they prefer private to public approaches and would not support efforts to reduce the severity of cases of illness over risk reductions.
Handle: RePEc:nbr:nberwo:14287
Template-Type: ReDIF-Paper 1.0
Title: Federal Budget Rules: The US Experience
Classification-JEL: D78; H62; J11
Author-Name: Alan J. Auerbach
Author-Person: pau33
Note: PE
Number: 14288
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14288
File-URL: http://www.nber.org/papers/w14288.pdf
File-Format: application/pdf
Publication-Status: published as Alan Auerbach, 2009. "US Experience with Federal Budget Rules," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 7(1), pages 41-48, 04.
Abstract: Like many other developed economies, the United States has imposed fiscal rules in attempting to impose a degree of fiscal discipline on the political process of budget determination. The federal government has operated under a series of budget control regimes that have been complex in nature and of debatable impact. Much of the complexity of these federal budget regimes relates to the structure of the U.S. federal government. The controversy over the impact of different regimes relates to the fact that the rules have no constitutional standing, leading to the question of whether they do more than clarify a government's intended policies. In this paper, I review US federal budget rules and present some evidence on their possible effects. From an analysis of how components of the federal budget behaved under the different budget regimes, it appears that the rules did have some effects, rather than simply being statements of policy intentions. The rules may also have had some success at deficit control, although such conclusions are highly tentative given the many other factors at work during the different periods. Even less certain is the extent to which the various rules achieved whatever objectives underlay their introduction.
Handle: RePEc:nbr:nberwo:14288
Template-Type: ReDIF-Paper 1.0
Title: Product Market Synergies and Competition in Mergers and Acquisitions: A Text-Based Analysis
Classification-JEL: G3; G34
Author-Name: Gerard Hoberg
Author-Name: Gordon M. Phillips
Author-Person: pph31
Note: CF
Number: 14289
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14289
File-URL: http://www.nber.org/papers/w14289.pdf
File-Format: application/pdf
Publication-Status: published as Gerard Hoberg & Gordon Phillips, 2010. "Product Market Synergies and Competition in Mergers and Acquisitions: A Text-Based Analysis," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 23(10), pages 3773-3811, October.
Abstract: We examine how product differentiation influences mergers and acquisitions and the ability of firms to exploit product market synergies. Using novel text-based analysis of firm 10K product descriptions, we find three key results. (1) Firms are more likely to enter restructuring transactions when the language describing their assets is similar to all other firms, consistent with their assets being more redeployable. (2) Targets earn lower announcement returns when similar alternative target firms exist. (3) Acquiring firms in competitive product markets experience increased profitability, higher sales growth, and increased changes in their product descriptions when they buy target firms that are similar to them and different from rival firms. Our findings are consistent with similar merging firms exploiting synergies to create new products and increase their product differentiation relative to ex-ante rivals.
Handle: RePEc:nbr:nberwo:14289
Template-Type: ReDIF-Paper 1.0
Title: Real and Financial Industry Booms and Busts
Classification-JEL: G10; G14; G31
Author-Name: Gerard Hoberg
Author-Name: Gordon M. Phillips
Author-Person: pph31
Note: AP CF
Number: 14290
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14290
File-URL: http://www.nber.org/papers/w14290.pdf
File-Format: application/pdf
Publication-Status: published as Gerard Hoberg & Gordon Phillips, 2010. "Real and Financial Industry Booms and Busts," Journal of Finance, American Finance Association, vol. 65(1), pages 45-86, 02.
Abstract: We examine how product market competition affects firm cash flows and stock returns in industry booms and busts. In competitive industries, we find that high industry-level stock-market valuation, investment and new financing are followed by sharply lower operating cash flows and abnormal stock returns. We also find that analyst estimates are positively biased and returns comove more when industry valuations are high in competitive industries. In concentrated industries these relations are weak and generally insignificant. Our results suggest that when industry stock-market valuations are high, firms and investors in competitive industries do not fully internalize the negative externality of industry competition on cash flows and stock returns.
Handle: RePEc:nbr:nberwo:14290
Template-Type: ReDIF-Paper 1.0
Title: Post-Merger Restructuring and the Boundaries of the Firm
Classification-JEL: G3; G34
Author-Name: Vojislav Maksimovic
Author-Person: pma549
Author-Name: Gordon Phillips
Author-Person: pph31
Author-Name: N. R. Prabhala
Note: CF
Number: 14291
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14291
File-URL: http://www.nber.org/papers/w14291.pdf
File-Format: application/pdf
Publication-Status: published as Maksimovic, Vojislav & Phillips, Gordon & Prabhala, N.R., 2011. "Post-merger restructuring and the boundaries of the firm," Journal of Financial Economics, Elsevier, vol. 102(2), pages 317-343.
Abstract: Mergers and acquisitions are a fast way for a firm to grow. Using plant-level data, we examine how firms redraw their boundaries after acquisitions. We find that there is a large amount of restructuring in a short period following mergers. Acquirers sell 27% and close 19% of acquired plants within three years of the acquisition. Plants in the target's peripheral divisions, especially in industries in which asset values are increasing, and in industries in which the acquirer does not have a comparative advantage, are more likely to be sold by the acquirer. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Plants retained by acquirers increase in productivity whereas sold plants do not. The extent of post-merger restructuring activities and their cross-sectional variation do not support an empire building explanation for mergers. Acquirers readjust their firm boundaries in ways that are consistent with the exploitation of their comparative advantage across industries.
Handle: RePEc:nbr:nberwo:14291
Template-Type: ReDIF-Paper 1.0
Title: Global Business Cycles: Convergence or Decoupling?
Classification-JEL: C11; C32; E32; F41; F42
Author-Name: M. Ayhan Kose
Author-Person: pko65
Author-Name: Christopher Otrok
Author-Person: pot2
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: EFG IFM
Number: 14292
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14292
File-URL: http://www.nber.org/papers/w14292.pdf
File-Format: application/pdf
Publication-Status: published as M. Ayhan Kose & Christopher Otrok & Eswar Prasad, 2012. "Global Business Cycles: Convergence Or Decoupling?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 511-538, 05.
Abstract: This paper analyzes the evolution of the degree of global cyclical interdependence over the period 1960-2005. We categorize the 106 countries in our sample into three groups -- industrial countries, emerging markets, and other developing economies. Using a dynamic factor model, we then decompose macroeconomic fluctuations in key macroeconomic aggregates -- output, consumption, and investment -- into different factors. These are: (i) a global factor, which picks up fluctuations that are common across all variables and countries; (ii) three group-specific factors, which capture fluctuations that are common to all variables and all countries within each group of countries; (iii) country factors, which are common across all aggregates in a given country; and (iv) idiosyncratic factors specific to each time series. Our main result is that, during the period of globalization (1985-2005), there has been some convergence of business cycle fluctuations among the group of industrial economies and among the group of emerging market economies. Surprisingly, there has been a concomitant decline in the relative importance of the global factor. In other words, there is evidence of business cycle convergence within each of these two groups of countries but divergence (or decoupling) between them.
Handle: RePEc:nbr:nberwo:14292
Template-Type: ReDIF-Paper 1.0
Title: Effects of Low-Skilled Immigration on U.S. Natives: Evidence from Hurricane Mitch
Classification-JEL: J11; J21; J31; J61
Author-Name: Adriana Kugler
Author-Person: pku361
Author-Name: Mutlu Yuksel
Author-Person: pyu97
Note: LS
Number: 14293
Creation-Date: 2008-08
Order-URL: http://www.nber.org/papers/w14293
File-URL: http://www.nber.org/papers/w14293.pdf
File-Format: application/pdf
Publication-Status: published as “Do Recent Latino Immigrants Compete for Jobs with Native Hispanics and Earlier Latino Immigrants?” (with Mutlu Yuksel), in David Leal and Stephen Trejo, eds., Latinos and the Economy Integration and Impact in Schools, Labor Markets, and Beyond, Springer (2011), pp.213-232.
Abstract: In the 1980s the composition of immigrants to the U.S. shifted towards less-skilled workers. Around this time, real wages and employment of younger and less-educated U.S. workers fell. Some blame recent immigration shifts for the misfortunes of unskilled workers in the U.S. OLS estimates using Census data show instead that native wages are positively related to the recent influx of Latin Americans. However, these estimates are biased if demand shocks are positively related to immigration. An IV strategy, which deals with the endogeneity of immigration by exploiting a large influx of Central American immigrants towards U.S. Southern ports of entry after Hurricane Mitch, also generates positive wage effects but only for more educated native men. Yet, ignoring the flows of native and earlier immigrants in response to this exogeneous immigration is likely to generate upward biases in these estimates too. Native wage effects disappear and less-skilled employment of previous Latin American immigrants falls when controlling for out-migration. This highlights the importance of controlling for out-migration not only of natives but also of previous immigrants in regional studies of immigration.
Handle: RePEc:nbr:nberwo:14293
Template-Type: ReDIF-Paper 1.0
Title: The Foreclosure-House Price Nexus: Lessons from the 2007-2008 Housing Turmoil
Classification-JEL: R21; R31
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Stanley D. Longhofer
Author-Name: William Miles
Note: EFG
Number: 14294
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14294
File-URL: http://www.nber.org/papers/w14294.pdf
File-Format: application/pdf
Abstract: Despite housing's importance to the economy and worries about recent financial and economic turmoil traceable to housing market difficulties, little has been written on how distress in the housing market, measured by foreclosures, affects home prices, or how these variables interact with other macroeconomic or housing variables such as employment, housing permits or sales. Employing a panel VAR model to examine quarterly state-level data, our paper is the first to systematically analyze these interactions. There is substantial regional variation across states, which facilitates our ability to identify linkages among variables. Importantly, price-foreclosure linkages work in both directions; foreclosures have a significant, negative effect on home prices, while an increase in prices alleviates distress by lowering foreclosures. Similarly, employment and foreclosures have mutually negative effects on each other. The impact of foreclosures on prices, while negative and significant, is quite small in magnitude. We demonstrate this by simulating house price changes in response to extreme foreclosure shocks. Even under extremely pessimistic scenarios for foreclosure shocks, average U.S. house prices, as measured by the comprehensive OFHEO house price index (which we argue is the most reliable and useful measure of house prices to use for our purposes), likely would decline only slightly or remain essentially flat in response to foreclosures like those predicted for the 2008-2009 period. This suggests that home prices are quite sticky, and that fears of a major fall in house prices, with all of its attendant negative macroeconomic consequences, typically are not warranted even in extreme foreclosure circumstances.
Handle: RePEc:nbr:nberwo:14294
Template-Type: ReDIF-Paper 1.0
Title: Current Account Sustainability and Relative Reliability
Classification-JEL: F3
Author-Name: Stephanie E. Curcuru
Author-Name: Charles P. Thomas
Author-Person: pth302
Author-Name: Francis E. Warnock
Note: IFM
Number: 14295
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14295
File-URL: http://www.nber.org/papers/w14295.pdf
File-Format: application/pdf
Publication-Status: published as Frankel, Jeffrey and Christopher Pissarides (eds.) NBER International Seminar on Macroeconomics 2008. Chicago: University of Chicago Press, 2009.
Publication-Status: published as Current Account Sustainability and Relative Reliability, Stephanie E. Curcuru, Charles P. Thomas, Francis E. Warnock. in NBER International Seminar on Macroeconomics 2008, Frankel and Pissarides. 2009
Abstract: The sustainability of the large and persistent U.S. current account deficits is one of the biggest issues currently being confronted by international macroeconomists. Some very plausible theories suggest that the substantial global imbalances can continue in a benign manner, other equally plausible theories predict a disorderly resolution, and in general it is very difficult to discern between competing theories. To inform the debates, we view competing theories through the perspective of the relative reliability of the data the theories rely on. Our analysis of the dark matter theory is cursory; from a relative reliability perspective, it fails as it is built on the assumption that an item that is largely unmeasured is the most accurate component of the entire set of international accounts. Similarly, the best data currently available suggest that U.S. returns differentials are much smaller than implied by the exorbitant privilege theory. Our analysis opens up questions about potential inconsistencies in the international accounts, which we address by providing rough estimates of various holes in the accounts.
Handle: RePEc:nbr:nberwo:14295
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies
Classification-JEL: H42; H51; I11; I18; L13; L51; L88
Author-Name: Claudio Lucarelli
Author-Name: Jeffrey Prince
Author-Person: ppr63
Author-Name: Kosali Simon
Author-Person: psi314
Note: EH
Number: 14296
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14296
File-URL: http://www.nber.org/papers/w14296.pdf
File-Format: application/pdf
Publication-Status: published as Claudio Lucarelli & Jeffrey Prince & Kosali Simon, 2012. "The Welfare Impact Of Reducing Choice In Medicare Part D: A Comparison Of Two Regulation Strategies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1155-1177, November.
Abstract: Motivated by widely publicized concerns that there are "too many" plans, we structurally estimate (and validate) an equilibrium model of the Medicare Part D market to study the welfare impacts of two feasible, similar-sized approaches for reducing choice. One reduces the maximum number of firm offerings regionally; the other removes plans providing donut hole coverage - consumers' most valued dimension. We find welfare losses are far smaller when coupled with elimination of a dimension of differentiation, as in the latter approach. We illustrate our findings' relevance under current health care reforms, and consider the merits of instead imposing ex ante competition for entry.
Handle: RePEc:nbr:nberwo:14296
Template-Type: ReDIF-Paper 1.0
Title: School Nutrition Programs and the Incidence of Childhood Obesity
Classification-JEL: C13; H51; I18; I28
Author-Name: Daniel L. Millimet
Author-Person: pmi3
Author-Name: Rusty Tchernis
Author-Person: ptc4
Author-Name: Muna Husain
Note: EH
Number: 14297
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14297
File-URL: http://www.nber.org/papers/w14297.pdf
File-Format: application/pdf
Publication-Status: published as Daniel L. Millimet & Rusty Tchernis & Muna Husain, 2010. "School Nutrition Programs and the Incidence of Childhood Obesity," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
Abstract: In light of the recent rise in childhood obesity, the School Breakfast Program (SBP) and National School Lunch Program (NSLP) have received renewed attention. Using panel data on over 13,500 primary school students, we assess the relationship between SBP and NSLP participation and (relatively) long-run measures of child weight. After documenting a positive association between SBP participation and child weight, and no association between NSLP participation and child weight, we present evidence indicating positive selection into the SBP. Allowing for even modest positive selection is sufficient to alter the results, indicating that the SBP is a valuable tool in the current battle against childhood obesity, whereas the NSLP exacerbates the current epidemic.
Handle: RePEc:nbr:nberwo:14297
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Property Rights: Establishing Institutions on the Philippine Frontier Under American Rule, 1898-1918
Classification-JEL: N45; N55; P14; P16; Q15
Author-Name: Noel Maurer
Author-Name: Lakshmi Iyer
Author-Person: piy9
Note: DAE
Number: 14298
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14298
File-URL: http://www.nber.org/papers/w14298.pdf
File-Format: application/pdf
Abstract: We examine three reforms to property rights introduced by the United States in the Philippines in the early 20th century: the redistribution of large estates to their tenants, the creation of a system of secure land titles, and a homestead program to encourage cultivation of public lands. During the first phase of American occupation (1898-1918), we find that the progress of implementing these reforms was very slow. As a consequence, tenure insecurity increased over this period, and the distribution of farm sizes remained extremely unequal. We identify two primary causes for the slow progress of reform: first, the high cost of implementing these programs was a major factor in reducing take-up. On the other hand, the government was reluctant to evict delinquent or informal cultivators, especially on public lands. This reduced the costs of tenure insecurity. Political constraints prevented the government from subsidizing land reforms to a greater degree.
Handle: RePEc:nbr:nberwo:14298
Template-Type: ReDIF-Paper 1.0
Title: Power Laws in Economics and Finance
Classification-JEL: E0; F1; G1; R0
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: AP EFG
Number: 14299
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14299
File-URL: http://www.nber.org/papers/w14299.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gabaix, 2009. "Power Laws in Economics and Finance," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 255-294, 05.
Abstract: A power law is the form taken by a large number of surprising empirical regularities in economics and finance. This article surveys well-documented empirical power laws concerning income and wealth, the size of cities and firms, stock market returns, trading volume, international trade, and executive pay. It reviews detail-independent theoretical motivations that make sharp predictions concerning the existence and coefficients of power laws, without requiring delicate tuning of model parameters. These theoretical mechanisms include random growth, optimization, and the economics of superstars coupled with extreme value theory. Some of the empirical regularities currently lack an appropriate explanation. This article highlights these open areas for future research.
Handle: RePEc:nbr:nberwo:14299
Template-Type: ReDIF-Paper 1.0
Title: Business Volatility, Job Destruction, and Unemployment
Classification-JEL: E24; E32; J60
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: R. Jason Faberman
Author-Person: pfa260
Author-Name: John Haltiwanger
Author-Person: pha231
Author-Name: Ron Jarmin
Author-Person: pja54
Author-Name: Javier Miranda
Author-Person: pmi185
Note: EFG LS
Number: 14300
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14300
File-URL: http://www.nber.org/papers/w14300.pdf
File-Format: application/pdf
Publication-Status: published as Steven J. Davis & R. Jason Faberman & John Haltiwanger & Ron Jarmin & Javier Miranda, 2010. "Business Volatility, Job Destruction, and Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 259-87
Publication-Status: published as Steven J. Davis & R. Jason Faberman & John Haltiwanger & Ron Jarmin & Javier Miranda, 2007. "Business volatility, job destruction and unemployment," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
Abstract: Unemployment inflows fell from 4 percent of employment per month in the early 1980s to 2 percent or less by the mid 1990s and thereafter. U.S. data also show a secular decline in the job destruction rate and the volatility of firm-level employment growth rates. We interpret this decline as a decrease in the intensity of idiosyncratic labor demand shocks, a key parameter in search and matching models of unemployment. According to these models, a lower intensity of idiosyncratic shocks produces less job destruction, fewer workers flowing through the unemployment pool and less frictional unemployment. To evaluate the importance of this theoretical mechanism, we relate industry-level unemployment flows from 1977 to 2005 to industry-level indicators for the intensity of idiosyncratic shocks. Unlike previous research, we focus on the lower frequency relationship of job destruction and business volatility to unemployment flows. We find strong evidence that declines in the intensity of idiosyncratic labor demand shocks drove big declines in the incidence and rate of unemployment. This evidence implies that the unemployment rate has become much less sensitive to cyclical movements in the job-finding rate.
Handle: RePEc:nbr:nberwo:14300
Template-Type: ReDIF-Paper 1.0
Title: Transfer Program Complexity and the Take Up of Social Benefits
Classification-JEL: H53; I3; I38
Author-Name: Henrik Jacobsen Kleven
Author-Name: Wojciech Kopczuk
Author-Person: pko20
Note: LS PE
Number: 14301
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14301
File-URL: http://www.nber.org/papers/w14301.pdf
File-Format: application/pdf
Publication-Status: published as Henrik Jacobsen Kleven & Wojciech Kopczuk, 2011. "Transfer Program Complexity and the Take-Up of Social Benefits," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 54-90, February.
Abstract: This paper models complexity in social programs as a byproduct of efforts to screen between deserving and undeserving applicants. While a more rigorous screening technology may have desirable effects on targeting efficiency, the associated complexity introduces transaction costs into the application process and may induce incomplete take up. The paper integrates the study of take up with the study of classification errors of type I and type II, and argue that incomplete take up can be seen as a form of type I error. We consider a government interested in ensuring a minimum income level for as many deserving individuals as possible, and characterize optimal programs when policy makers can choose the rigor of screening (and associated complexity) along with a benefit level and an eligibility criterion. It is shown that optimal program parameters reflect a trade-off at the margin between type I errors (including non-takeup) and type II errors. Optimal programs that are not universal always feature a high degree of complexity. Although it is generally possible to eliminate take up by the undeserving (type II errors), policies usually involve eligibility criteria that make them eligible and rely on complexity to restrict their participation. Even though the government is interested only in ensuring a minimum benefit level, the optimal policy may feature benefits that are higher than this target minimum. This is because benefits generically screen better than either eligibility criteria or complexity. We present numerical simulations on comparative statics with respect to budget size, ability distribution, complexity costs, and stigma. Our results are discussed in light of empirical findings for public programs in the United States.
Handle: RePEc:nbr:nberwo:14301
Template-Type: ReDIF-Paper 1.0
Title: Attitude-Dependent Altruism, Turnout and Voting
Classification-JEL: D64; D72
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: POL
Number: 14302
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14302
File-URL: http://www.nber.org/papers/w14302.pdf
File-Format: application/pdf
Publication-Status: published as Julio Rotemberg, 2009. "Attitude-dependent altruism, turnout and voting," Public Choice, Springer, vol. 140(1), pages 223-244, July.
Abstract: This paper presents a goal-oriented model of political participation based on two psychological assumptions. The first is that people are more altruistic towards individuals that agree with them and the second is that people's well-being rises when other people share their personal opinions. The act of voting is then a source of vicarious utility because it raises the well-being of individuals that agree with the voter. Substantial equilibrium turnout emerges with nontrivial voting costs and modest altruism. The model can explain higher turnout in close elections as well as votes for third-party candidates with no prospect of victory. For certain parameters, these third party candidates lose votes to more popular candidates, a phenomenon often called strategic voting. For other parameters, the model predicts "vote-stealing" where the addition of a third candidate robs a viable major candidate of electoral support.
Handle: RePEc:nbr:nberwo:14302
Template-Type: ReDIF-Paper 1.0
Title: Does Church Attendance Cause People to Vote? Using Blue Laws' Repeal to Estimate the Effect of Religiosity on Voter Turnout
Classification-JEL: H1; J2
Author-Name: Alan Gerber
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Note: PE
Number: 14303
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14303
File-URL: http://www.nber.org/papers/w14303.pdf
File-Format: application/pdf
Publication-Status: published as Gerber, Alan S. & Gruber, Jonathan & Hungerman, Daniel M., 2016. "Does Church Attendance Cause People to Vote? Using Blue Laws’ Repeal to Estimate the Effect of Religiosity on Voter Turnout," British Journal of Political Science, Cambridge University Press, vol. 46(03), pages 481-500, July.
Abstract: Regular church attendance is strongly associated with a higher probability of voting. It is an open question as to whether this association, which has been confirmed in numerous surveys, is causal. We use the repeal of the laws restricting Sunday retail activity ("Blue laws") to measure the effects of church-going on political participation. The repeal of Blue Laws caused a 5 percent decrease in church attendance. We measure the effect of Blue Laws' repeal on political participation and find that following the repeal turnout falls by approximately 1 percentage point. This turnout decline, which is statistically significant and fairly robust across model specifications, is consistent with the large effect of church attendance on turnout reported in the literature, and suggests that church attendance may have significant causal influence on voter turnout.
Handle: RePEc:nbr:nberwo:14303
Template-Type: ReDIF-Paper 1.0
Title: Reconsidering the Economics of Demand Analysis with Kinked Budget Constraints
Classification-JEL: H42; Q21
Author-Name: Aaron Strong
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 14304
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14304
File-URL: http://www.nber.org/papers/w14304.pdf
File-Format: application/pdf
Publication-Status: published as Aaron Strong & V. Kerry Smith, 2010. "Reconsidering the Economics of Demand Analysis with Kinked Budget Constraints," Land Economics, University of Wisconsin Press, vol. 86(1), pages 173-190.
Abstract: This paper has two objectives. First, we identify a problem with the ability of the discrete-continuous choice (DCC) framework and conditional demand functions to fully describe consumer preferences in the presence of kinked budget constraints. Second, we propose and illustrate an alternative, preference based, method for estimating consumer responses to price changes under these conditions. Our preference based approach yields price elasticities on the order of 0.4 and a "utilities expenditure" elasticity of near unity. This research highlights the possibility that households may be more sensitive to price schedules than previously thought. It is recognizes commitments to commodities such as pools or outdoor landscaping influence how water consumption responds to price changes as part of the long run adjustments.
Handle: RePEc:nbr:nberwo:14304
Template-Type: ReDIF-Paper 1.0
Title: Quality competition versus price competition goods: An empirical classification
Classification-JEL: F14
Author-Name: Richard E. Baldwin
Author-Person: pba124
Author-Name: Tadashi Ito
Author-Person: pit21
Note: ITI
Number: 14305
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14305
File-URL: http://www.nber.org/papers/w14305.pdf
File-Format: application/pdf
Publication-Status: published as E. Baldwin, Richard & Ito, Tadashi, 2011. "Quality Competition Versus Price Competition Goods: An Empirical Classification," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 110-135.
Abstract: Based on the recent trade models of the Heterogeneous Firms Trade (HFT) model and the Quality Heterogeneous Firms Trade (QHFT) model, we classify export goods (at the HS 6-digit level of disaggregation) by quality and price competition. We find a high proportions of quality-competition goods for the major EU countries and lower proportions for Canada, Australia and China. However, the overlap of these quality-competition goods is not large, which suggests that characteristics of export goods are substantially different across countries at the same HS 6-digit code.
Handle: RePEc:nbr:nberwo:14305
Template-Type: ReDIF-Paper 1.0
Title: Inside the War on Poverty: The Impact of Food Stamps on Birth Outcomes
Classification-JEL: H51; I1; I3
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH LS PE
Number: 14306
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14306
File-URL: http://www.nber.org/papers/w14306.pdf
File-Format: application/pdf
Publication-Status: published as Douglas Almond & Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2011. "Inside the War on Poverty: The Impact of Food Stamps on Birth Outcomes," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 387-403, December.
Abstract: This paper evaluates the health impact of a signature initiative of the War on Poverty: the roll out of the modern Food Stamp Program (FSP) during the 1960s and early 1970s. Using variation in the month the FSP began operating in each U.S. county, we find that pregnancies exposed to the FSP three months prior to birth yielded deliveries with increased birth weight, with the largest gains at the lowest birth weights. These impacts are evident with difference-in-difference models and event study analyses. Estimated impacts are robust to inclusion of county fixed effects, time fixed effects, measures of other federal transfer spending, state by year fixed effects, and county-specific linear time trends. We also find that the FSP rollout leads to small, but statistically insignificant, improvements in neonatal infant mortality. We conclude that the sizeable increase in income from Food Stamp benefits improved birth outcomes for both whites and African Americans, with larger impacts for births to African American mothers.
Handle: RePEc:nbr:nberwo:14306
Template-Type: ReDIF-Paper 1.0
Title: Redistribution and Tax Expenditures: The Earned Income Tax Credit
Classification-JEL: H2
Author-Name: Nada Eissa
Author-Name: Hilary Hoynes
Author-Person: pho278
Note: PE
Number: 14307
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14307
File-URL: http://www.nber.org/papers/w14307.pdf
File-Format: application/pdf
Publication-Status: published as Eissa, Nada & Hoynes, Hilary, 2011. "Redistribution And Tax Expenditures: The Earned Income Tax Credit," National Tax Journal, National Tax Association, vol. 64(2), pages 689-729, June Cita.
Publication-Status: published as Redistribution and Tax Expenditures: The Earned Income Tax Credit, Nada Eissa, Hilary Hoynes. in Economic Analysis of Tax Expenditures, Poterba. 2011
Abstract: This paper examines the distributional and behavioral effects of the Earned Income Tax Credit (EITC). We chart the growth of the program over time, and argue several expansions show that real responses to taxes are important. We use tax data to show the distribution of benefits by income and family size, and examine the impacts of hypothetical reforms (expansions and contractions) to the credit. Finally, we calculate the efficiency effects of marginal changes to EITC parameters. Targeting the EITC to lower-income families by raising the phase-out rate generates a welfare loss for single mothers, primarily because of the disincentive to enter the labor market and not the traditional hours-of-work distortion.
Handle: RePEc:nbr:nberwo:14307
Template-Type: ReDIF-Paper 1.0
Title: The Prevalence and Effects of Occupational Licensing
Classification-JEL: J08
Author-Name: Morris M. Kleiner
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: LS
Number: 14308
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14308
File-URL: http://www.nber.org/papers/w14308.pdf
File-Format: application/pdf
Publication-Status: published as Morris M. Kleiner & Alan B. Krueger, 2010. "The Prevalence and Effects of Occupational Licensing," British Journal of Industrial Relations, London School of Economics, vol. 48(4), pages 676-687, December.
Abstract: This study provides the first nation-wide analysis of the labor market implications of occupational licensing for the U.S. labor market, using data from a specially designed Gallup survey. We find that in 2006, 29 percent of the workforce was required to hold an occupational license from a government agency, which is a higher percentage than that found in studies that rely on state-level occupational licensing data. Workers who have higher levels of education are more likely to work in jobs that require a license. Union workers and government employees are more likely to have a license requirement than are nonunion or private sector employees. Our multivariate estimates suggest that licensing has about the same quantitative impact on wages as do unions -- that is about 15 percent, but unlike unions which reduce variance in wages, licensing does not significantly reduce wage dispersion for individuals in licensed jobs.
Handle: RePEc:nbr:nberwo:14308
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Medicare Coverage for the Disabled on the Market for Private Insurance
Classification-JEL: I1
Author-Name: John F. Cogan
Author-Name: R. Glenn Hubbard
Author-Person: phu97
Author-Name: Daniel P. Kessler
Note: EH
Number: 14309
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14309
File-URL: http://www.nber.org/papers/w14309.pdf
File-Format: application/pdf
Publication-Status: published as John F. Cogan & R. Glenn Hubbard & Daniel P. Kessler, 2010. "The effect of Medicare coverage for the disabled on the market for private insurance," Journal of Health Economics, vol 29(3), pages 418-425.
Abstract: Subsidies for health insurance for chronically ill, high-cost individuals may increase coverage in the broader population by improving the functioning of insurance markets. In this paper, we assess an historical example of a policy intervention of this sort, the extension of Medicare to the disabled, on the private insurance coverage of non-disabled individuals. We use data on insurance coverage from the Panel Study of Income Dynamics from before and after the extension of Medicare to the disabled to estimate the effect of the program on private insurance coverage rates in the broader population. We find that the insurance coverage of individuals who had a health condition that limited their ability to work increased significantly in states with high versus low rates of disability. Our findings suggest that that subsidizing individuals with high expected health costs is an effective way to increase the private insurance coverage of other high-cost individuals.
Handle: RePEc:nbr:nberwo:14309
Template-Type: ReDIF-Paper 1.0
Title: Housing Busts and Household Mobility
Classification-JEL: R0; R21; R23
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Joseph Tracy
Author-Person: ptr23
Note: PE
Number: 14310
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14310
File-URL: http://www.nber.org/papers/w14310.pdf
File-Format: application/pdf
Publication-Status: published as Ferreira, Fernando & Gyourko, Joseph & Tracy, Joseph, 2010. "Housing busts and household mobility," Journal of Urban Economics, Elsevier, vol. 68(1), pages 34-45, July.
Abstract: Using two decades of American Housing Survey data from 1985-2005, we estimate the impact on household mobility of owners having negative equity in their homes and of rising mortgage interest rates. We find that both lead to lower, not higher, mobility rates over time. The impacts are economically large, with mobility being almost 50 percent lower for owners with negative equity in their homes. This does not imply that current worries about defaults and owners having to move from their homes are entirely misplaced. It does indicate that, in the past, the lock-in effects of these two factors were dominant over time. Our results cannot simply be extrapolated to the future, but policy makers should begin to consider the consequences of lock-in and reduced household mobility because they are quite different from those associated with default and higher mobility.
Handle: RePEc:nbr:nberwo:14310
Template-Type: ReDIF-Paper 1.0
Title: Pitfalls of Participatory Programs: Evidence From a Randomized Evaluation in Education in India
Classification-JEL: I21; O12
Author-Name: Abhijit Banerjee
Author-Name: Rukmini Banerji
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Rachel Glennerster
Author-Person: pgl73
Author-Name: Stuti Khemani
Author-Person: pkh108
Note: CH
Number: 14311
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14311
File-URL: http://www.nber.org/papers/w14311.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit V. Banerjee & Rukmini Banerji & Esther Duflo & Rachel Glennerster & Stuti Khemani, 2010. "Pitfalls of Participatory Programs: Evidence from a Randomized Evaluation in Education in India," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 1-30, February.
Abstract: Participation of beneficiaries in the monitoring of public services is increasingly seen as a key to improving their efficiency. In India, the current government flagship program on universal primary education organizes both locally elected leaders and parents of children enrolled in public schools into committees and gives these groups powers over resource allocation, and monitoring and management of school performance. However, in a baseline survey we found that people were not aware of the existence of these committees and their potential for improving education. This paper evaluates three different interventions to encourage beneficiaries' participation through these committees: providing information, training community members in a new testing tool, and training and organizing volunteers to hold remedial reading camps for illiterate children. We find that these interventions had no impact on community involvement in public schools, and no impact on teacher effort or learning outcomes in those schools. However, we do find that the intervention that trained volunteers to teach children to read had a large impact on activity outside public schools -- local youths volunteered to be trained to teach, and children who attended these camps substantially improved their reading skills. These results suggest that citizens face substantial constraints in participating to improve the public education system, even when they care about education and are willing to do something to improve it.
Handle: RePEc:nbr:nberwo:14311
Template-Type: ReDIF-Paper 1.0
Title: How Much Does Immigration Boost Innovation?
Classification-JEL: J61; O31
Author-Name: Jennifer Hunt
Author-Person: phu9
Author-Name: Marjolaine Gauthier-Loiselle
Note: LS
Number: 14312
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14312
File-URL: http://www.nber.org/papers/w14312.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer Hunt & Marjolaine Gauthier-Loiselle, 2010. "How Much Does Immigration Boost Innovation?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 31-56, April.
Abstract: We measure the extent to which skilled immigrants increase innovation in the United States by exploring individual patenting behavior as well as state-level determinants of patenting. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, and that this is entirely accounted for by their disproportionately holding degrees in science and engineering. These data imply that a one percentage point rise in the share of immigrant college graduates in the population increases patents per capita by 6%. This could be an overestimate of immigration's benefit if immigrant inventors crowd out native inventors, or an underestimate if immigrants have positive spill-overs on inventors. Using a 1950-2000 state panel, we show that natives are not crowded out by immigrants, and that immigrants do have positive spill-overs, resulting in an increase in patents per capita of about 15% in response to a one percentage point increase in immigrant college graduates. We isolate the causal effect by instrumenting the change in the share of skilled immigrants in a state with the initial share of immigrant high school dropouts from Europe, China and India. In both data sets, the positive impacts of immigrant post-college graduates and scientists and engineers are larger than for immigrant college graduates.
Handle: RePEc:nbr:nberwo:14312
Template-Type: ReDIF-Paper 1.0
Title: New Keynesian Models: Not Yet Useful for Policy Analysis
Classification-JEL: E32; E58
Author-Name: V.V. Chari
Author-Person: pch40
Author-Name: Patrick J. Kehoe
Author-Person: pke4
Author-Name: Ellen R. McGrattan
Author-Person: pmc46
Note: EFG
Number: 14313
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14313
File-URL: http://www.nber.org/papers/w14313.pdf
File-Format: application/pdf
Publication-Status: published as V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2009. "New Keynesian Models: Not Yet Useful for Policy Analysis," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 242-66, January.
Abstract: Macroeconomists have largely converged on method, model design, reduced-form shocks, and principles of policy advice. Our main disagreements today are about implementing the methodology. Some think New Keynesian models are ready to be used for quarter-to-quarter quantitative policy advice; we do not. Focusing on the state-of-the-art version of these models, we argue that some of its shocks and other features are not structural or consistent with microeconomic evidence. Since an accurate structural model is essential to reliably evaluate the effects of policies, we conclude that New Keynesian models are not yet useful for policy analysis.
Handle: RePEc:nbr:nberwo:14313
Template-Type: ReDIF-Paper 1.0
Title: Teacher Preparation and Student Achievement
Classification-JEL: I20; I21; I28; J24; J45
Author-Name: Donald Boyd
Author-Name: Pamela Grossman
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED LS
Number: 14314
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14314
File-URL: http://www.nber.org/papers/w14314.pdf
File-Format: application/pdf
Publication-Status: published as Teacher preparation and student achievement. Donald Boyd, Pamela Grossman, Hamilton Lankford, Susanna Loeb, James Wyckoff. Education Evaluation and Policy Analysis, 31(4), pp. 416-440. 2009.
Abstract: There are fierce debates over the best way to prepare teachers. Some argue that easing entry into teaching is necessary to attract strong candidates, while others argue that investing in high quality teacher preparation is the most promising approach. Most agree, however, that we lack a strong research basis for understanding how to prepare teachers. This paper is one of the first to estimate the effects of features of teachers' preparation on teachers' value-added to student test score performance in math and English Language Arts. Our results indicate variation across preparation programs in the average effectiveness of the teachers they are supplying to New York City schools. In particular, preparation directly linked to practice appears to benefit teachers in their first year.
Handle: RePEc:nbr:nberwo:14314
Template-Type: ReDIF-Paper 1.0
Title: Demand Estimation Under Incomplete Product Availability
Classification-JEL: L0
Author-Name: Christopher T. Conlon
Author-Person: pco543
Author-Name: Julie Holland Mortimer
Author-Person: pmo678
Note: IO
Number: 14315
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14315
File-URL: http://www.nber.org/papers/w14315.pdf
File-Format: application/pdf
Publication-Status: published as Christopher T. Conlon & Julie Holland Mortimer, 2013. "Demand Estimation under Incomplete Product Availability," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 1-30, November.
Abstract: Incomplete product availability is an important feature of many markets; ignoring changes in availability may bias demand estimates. We study a new dataset from a wireless inventory system installed on 54 vending machines to track product availability every four hours. The data allow us to account for product availability when estimating demand, and provides a valuable source of variation for identifying substitution patterns. We develop a procedure that allows for changes in product availability even when availability is only observed periodically. We find significant differences in demand estimates, with the corrected model predicting significantly larger impacts of stock-outs on profitability.
Handle: RePEc:nbr:nberwo:14315
Template-Type: ReDIF-Paper 1.0
Title: Segregation and the Quality of Government in a Cross-Section of Countries
Classification-JEL: H10
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Ekaterina Zhuravskaya
Author-Person: pzh71
Note: PE
Number: 14316
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14316
File-URL: http://www.nber.org/papers/w14316.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Ekaterina Zhuravskaya, 2011. "Segregation and the Quality of Government in a Cross Section of Countries," American Economic Review, American Economic Association, vol. 101(5), pages 1872-1911, August.
Abstract: This paper has three goals. The first (and perhaps the most important one) is to provide a new compilation of data on ethnic, linguistic and religious composition at the sub-national level for a large number of countries. This data set allows us to measure segregation of different ethnic, religious and linguistic groups within the same country. The second goal is to correlate measures of segregation with measures of quality of the polity and policymaking. The third is to construct an instrument that helps to overcome the endogeneity problem due to the fact that groups move within country borders, partly in response to policies. Our results suggest that more segregated countries in terms of ethnicity and language, i.e., those where groups live more spatially separately, have a substantially lower quality of government. In contrast, there is no relationship between religious segregation and the government quality.
Handle: RePEc:nbr:nberwo:14316
Template-Type: ReDIF-Paper 1.0
Title: The Age Discrimination in Employment Act and the Challenge of Population Aging
Classification-JEL: J14; J71; J78
Author-Name: David Neumark
Author-Person: pne16
Note: AG
Number: 14317
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14317
File-URL: http://www.nber.org/papers/w14317.pdf
File-Format: application/pdf
Publication-Status: published as D. Neumark, 2009. "The Age Discrimination in Employment Act and the Challenge of Population Aging," Research on Aging, vol 31(1), pages 41-68.
Abstract: This paper reviews evidence on age discrimination in U.S. labor markets and on the effects of the Age Discrimination in Employment Act (ADEA) in combating this discrimination. It focuses on the challenge of population aging facing the U.S. economy in coming decades. Combating age discrimination is likely to help in meeting this challenge by encouraging employment of older individuals. But the paper also explores how rapid aging of the population protected by the ADEA might inhibit the ADEA's effectiveness, and raises questions about possible changes in age discrimination policies and enforcement that could enhance the ability of the ADEA to mitigate some of the adverse consequences of population aging.
Handle: RePEc:nbr:nberwo:14317
Template-Type: ReDIF-Paper 1.0
Title: International evidence on well-being
Classification-JEL: I1; J0
Author-Name: David G. Blanchflower
Author-Person: pbl22
Note: LS
Number: 14318
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14318
File-URL: http://www.nber.org/papers/w14318.pdf
File-Format: application/pdf
Publication-Status: published as International Evidence on Well-Being, David G. Blanchflower. in Measuring the Subjective Well-Being of Nations: National Accounts of Time Use and Well-Being, Krueger. 2009
Abstract: National Time Accounting is a way of measuring society's well-being, based on time use. Its explicit form is the U-index, for "unpleasant" or "undesirable", which measures the proportion of time an individual spends in an unpleasant state. In this paper I review cross-country evidence on happiness and life satisfaction and consider whether these data will likely be replaced by the U-index. I find that first, that there are many similarities. According to both measures happiness is higher for the more educated, for married people, for those with higher income and for whites and lower for the unemployed; is U-shaped in age and un-trended over time in the USA although they are trended up in a number of EU countries and especially so in developing countries. Equivalent results are found using self-reported unhappiness data. Second, there is a large body of data on happiness that is unavailable on the U-index. For example, according to happiness research well-being across nations is lower the higher is the unemployment rate, the current inflation rate and the highest inflation rate in a person's adult life. Higher inequality also lowers happiness. Third, we know little about the predictive power of the U-index. Happiness and life satisfaction data seem able to forecast migration flows. Fourth, happy people are particularly optimistic about the future. Fifth, according to the happiness data the US ranks above France but the U-index suggests the reverse.
Handle: RePEc:nbr:nberwo:14318
Template-Type: ReDIF-Paper 1.0
Title: Is a Donor in Hand Better than Two in the Bush? Evidence from a Natural Field Experiment
Classification-JEL: C93; H41; Q5
Author-Name: Craig E. Landry
Author-Person: pla339
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: John A. List
Author-Person: pli176
Author-Name: Michael K. Price
Author-Person: ppr89
Author-Name: Nicholas G. Rupp
Author-Person: pru112
Note: EEE PE
Number: 14319
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14319
File-URL: http://www.nber.org/papers/w14319.pdf
File-Format: application/pdf
Publication-Status: published as Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2010. "Is a Donor in Hand Better Than Two in the Bush? Evidence from a Natural Field Experiment," American Economic Review, American Economic Association, vol. 100(3), pages 958-83, June.
Abstract: This study develops theory and conducts an experiment to provide an understanding of why people initially give to charities, why they remain committed to the cause, and what factors attenuate these influences. Using an experimental design that links donations across distinct treatments separated in time, we present several insights. For example, we find that previous donors are more likely to give, and contribute more, than donors asked to contribute for the first time. Yet, how these previous donors were acquired is critical: agents who are initially attracted by signals of charitable quality transmitted via an economic mechanism are much more likely to continue giving than agents who were initially attracted by non-mechanism factors.
Handle: RePEc:nbr:nberwo:14319
Template-Type: ReDIF-Paper 1.0
Title: Optimal Minimum Wage Policy in Competitive Labor Markets
Classification-JEL: H21; J38
Author-Name: David Lee
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: LS PE
Number: 14320
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14320
File-URL: http://www.nber.org/papers/w14320.pdf
File-Format: application/pdf
Publication-Status: published as David Lee & Emmanuel Saez, 2012. "Optimal minimum wage policy in competitive labor markets," Journal of Public Economics, vol 96(9-10), pages 739-749.
Abstract: This paper provides a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. We show that a binding minimum wage -- while leading to unemployment -- is nevertheless desirable if the government values redistribution toward low wage workers and if unemployment induced by the minimum wage hits the lowest surplus workers first. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations the low skilled labor that is subsidized by the optimal tax/transfer system, and improves upon the second-best tax/transfer optimum. When labor supply responses are along the extensive margin, a minimum wage and low skill work subsidies are complementary policies; therefore, the co-existence of a minimum wage with a positive tax rate for low skill work is always (second-best) Pareto inefficient. We derive formulas for the optimal minimum wage (with and without optimal taxes) as a function of labor supply and demand elasticities and the redistributive tastes of the government. We also present some illustrative numerical simulations.
Handle: RePEc:nbr:nberwo:14320
Template-Type: ReDIF-Paper 1.0
Title: Capital Flow Bonanzas: An Encompassing View of the Past and Present
Classification-JEL: F30; F32; F34
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Vincent R. Reinhart
Note: IFM
Number: 14321
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14321
File-URL: http://www.nber.org/papers/w14321.pdf
File-Format: application/pdf
Publication-Status: published as Capital Flow Bonanzas: An Encompassing View of the Past and Present, Carmen M. Reinhart, Vincent R. Reinhart. in NBER International Seminar on Macroeconomics 2008, Frankel and Pissarides. 2009
Abstract: A considerable literature has examined the causes, consequences, and policy responses to surges in international capital flows. A related strand of papers has attempted to catalog current account reversals and capital account "sudden stops." This paper offers an encompassing approach with an algorithm cataloging capital inflow bonanzas in both advanced and emerging economies during 1980-2007 for 181 countries and 1960-2007 for a subset of 66 economies from all regions. In line with earlier studies, global factors, such as commodity prices, international interest rates, and growth in the world's largest economies, have a systematic effect on the global capital flow cycle. Bonanzas are no blessing for advanced or emerging market economies. In the case of the latter, capital inflow bonanzas are associated with a higher likelihood of economic crises (debt defaults, banking, inflation and currency crashes). Bonanzas in developing countries are associated with procyclical fiscal policies and attempts to curb or avoid an exchange rate appreciation -- very likely contributing to economic vulnerability. For the advanced economies, the results are not as stark, but bonanzas are associated with more volatile macroeconomic outcomes for GDP growth, inflation, and the external accounts. Slower economic growth and sustained declines in equity and housing prices follow at the end of the inflow episode.
Handle: RePEc:nbr:nberwo:14321
Template-Type: ReDIF-Paper 1.0
Title: Phillips Curve Inflation Forecasts
Classification-JEL: C53; E37
Author-Name: James H. Stock
Author-Person: pst148
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 14322
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14322
File-URL: http://www.nber.org/papers/w14322.pdf
File-Format: application/pdf
Publication-Status: published as James H. Stock & Mark W. Watson, 2008. "Phillips curve inflation forecasts," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 53.
Abstract: This paper surveys the literature since 1993 on pseudo out-of-sample evaluation of inflation forecasts in the United States and conducts an extensive empirical analysis that recapitulates and clarifies this literature using a consistent data set and methodology. The literature review and empirical results are gloomy and indicate that Phillips curve forecasts (broadly interpreted as forecasts using an activity variable) are better than other multivariate forecasts, but their performance is episodic, sometimes better than and sometimes worse than a good (not naïve) univariate benchmark. We provide some preliminary evidence characterizing successful forecasting episodes.
Handle: RePEc:nbr:nberwo:14322
Template-Type: ReDIF-Paper 1.0
Title: Strategic Interaction Among Heterogeneous Price-Setters In An Estimated DSGE Model
Classification-JEL: E3; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG ME
Number: 14323
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14323
File-URL: http://www.nber.org/papers/w14323.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko, 2011. "Strategic Interaction among Heterogeneous Price-Setters in an Estimated DSGE Model," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 920-940, 03.
Abstract: We consider a DSGE model in which firms follow one of four price-setting regimes: sticky prices, sticky-information, rule-of-thumb, or full-information flexible prices. The parameters of the model, including the fractions of each type of firm, are estimated by matching the moments of the observed variables of the model to those found in the data. We find that sticky-price firms and sticky-information firms jointly account for over 80% of firms in the model, with the rest largely accounted for by rule-of-thumb firms. We compare the performance of our hybrid model to pure sticky-price and sticky-information models along various dimensions, including monetary policy implications.
Handle: RePEc:nbr:nberwo:14323
Template-Type: ReDIF-Paper 1.0
Title: The Litigation of Financial Innovations
Classification-JEL: G21; O34
Author-Name: Josh Lerner
Author-Person: ple60
Note: CF PR
Number: 14324
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14324
File-URL: http://www.nber.org/papers/w14324.pdf
File-Format: application/pdf
Publication-Status: published as Josh Lerner, 2010. "The Litigation of Financial Innovations," Journal of Law and Economics, University of Chicago Press, vol. 53(4), pages 807 - 831.
Abstract: This paper examines the litigation of patents relating to financial products and services. I show that these grants are being litigated at a rate 27 to 39 times greater than that of patents as a whole. The patents being litigated are disproportionately those issued to individuals and to smaller, private entities, as well as those whose features may proxy for higher quality. Larger entities are disproportionately targeted in litigation. I discuss how the findings are in large part consistent with the theoretical literature on the economics of litigation.
Handle: RePEc:nbr:nberwo:14324
Template-Type: ReDIF-Paper 1.0
Title: Valuing a Homeland Security Policy: Countermeasures for the Threats from Shoulder Mounted Missiles
Classification-JEL: D61; H41; H56
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Carol Mansfield
Author-Name: Laurel Clayton
Note: EEE
Number: 14325
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14325
File-URL: http://www.nber.org/papers/w14325.pdf
File-Format: application/pdf
Publication-Status: published as V. Smith & Carol Mansfield & Laurel Clayton, 2009. "Valuing a homeland security policy: Countermeasures for the threats from shoulder mounted missiles," Journal of Risk and Uncertainty, Springer, vol. 38(3), pages 215-243, June.
Abstract: This paper reports estimates for the ex ante tradeoffs for three specific homeland security policies that all address a terrorist attack on commercial aircraft with shoulder mounted missiles. Our analysis focuses on the willingness to pay for anti-missile laser jamming countermeasures mounted on commercial aircraft compared with two other policies as well as the prospect of remaining with the status quo. Our findings are based a stated preference conjoint survey conducted in 2006 and administered to a sample from Knowledge Networks' national internet panel. The estimates range from $100 to $220 annually per household. Von Winterfeldt and O'Sullivan's [2006] analysis of the same laser jamming plan suggests that the countermeasures would be preferred if economic losses are above $74 billion, the probability of attack is larger than 0.37 in ten years, and if the cost of the measures is less than about $14 billion. Our results imply that, using the most conservative of our estimates, a program with a cost consistent with their thresholds would yield significant aggregate net benefits. More generally, this research grows out of a need to measure the benefits of an iconic public good -- national defense -- to assess the economic efficiency of Department of Homeland Security policies.
Handle: RePEc:nbr:nberwo:14325
Template-Type: ReDIF-Paper 1.0
Title: Medicare Part D's Effects on Elderly Drug Costs and Utilization
Classification-JEL: H42; I11; I18
Author-Name: Jonathan D. Ketcham
Author-Name: Kosali Simon
Author-Person: psi314
Note: EH
Number: 14326
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14326
File-URL: http://www.nber.org/papers/w14326.pdf
File-Format: application/pdf
Abstract: We analyze Medicare Part D's net effect on elderly out-of-pocket (OOP) costs and use of prescription drugs using a dataset containing 1.4 billion prescription records from Wolters Kluwer Health (WKH). These data span the period December 2004-December 2007 and include pharmacy customers whose age as of 2007 is greater than 57 years. The outcomes we examine are OOP cost per day's supply of a medication, the days of medication supplied per capita, and the number of individuals filling prescriptions. We compare outcomes before vs. after January 2006, for those over age 66 years vs. for those age 58-64 years, adjusting for the under-reporting of certain cash-only transactions in the WKH data. Our results indicate that from 2005-2007, Part D reduced elderly OOP costs per day's supply of medication by 21.7%, and increased elderly use of prescription drugs by 4.7%, implying a price elasticity of demand of -0.22. These effects occurred primarily during the first year of the program. An age- and time-standardized comparison of our quantity results with previous estimates from Walgreens data shows that our findings are 2.6 times as large. We conclude that Part D lowered elderly patients' OOP costs substantially and increased utilization modestly, and note that in comparing results across studies on this topic, magnitudes may vary substantially due to differences in data and methods.
Handle: RePEc:nbr:nberwo:14326
Template-Type: ReDIF-Paper 1.0
Title: Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations
Classification-JEL: J01; J3
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Yann Algan
Author-Person: pal51
Author-Name: Pierre Cahuc
Author-Person: pca333
Note: LS
Number: 14327
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14327
File-URL: http://www.nber.org/papers/w14327.pdf
File-Format: application/pdf
Abstract: Can public policy interfere with culture, such as beliefs and norms of cooperation? We investigate this question by evaluating the interactions between the State and the Civil Society, focusing on the labor market. International data shows a negative correlation between union density and the quality of labor relations on one hand, and state regulation of the minimum wage on the other hand. To explain this relation, we develop a model of learning of the quality of labor relations. State regulation crowds out the possibility for workers to experiment negotiation and learn about the true cooperative nature of participants in the labor market. This crowding out effect can give rise to multiple equilibria: a "good" equilibrium characterized by strong beliefs in cooperation, leading to high union density and low state regulation; and a "bad" equilibrium, characterized by distrustful labor relations, low union density and strong state regulation of the minimum wage. We then use surveys on social attitudes and unionization behavior to document the relation between minimum wage legislation and the beliefs about the scope of cooperation in the labor market.
Handle: RePEc:nbr:nberwo:14327
Template-Type: ReDIF-Paper 1.0
Title: Long-Term Care of the Disabled Elderly: Do Children Increase Caregiving by Spouses?
Classification-JEL: D1; J1; J2
Author-Name: Liliana E. Pezzin
Author-Name: Robert A. Pollak
Author-Person: ppo36
Author-Name: Barbara S. Schone
Note: LS
Number: 14328
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14328
File-URL: http://www.nber.org/papers/w14328.pdf
File-Format: application/pdf
Publication-Status: published as Liliana Pezzin & Robert Pollak & Barbara Schone, 2009. "Long-term care of the disabled elderly: do children increase caregiving by spouses?," Review of Economics of the Household, Springer, vol. 7(3), pages 323-339, September.
Abstract: Do adult children affect the care elderly parents provide each other? We develop two models in which the anticipated behavior of adult children provides incentives for elderly parents to increase care for their disabled spouses. The "demonstration effect" postulates that adult children learn from a parent's example that family caregiving is appropriate behavior. The "punishment effect" postulates that adult children may punish parents who fail to provide spousal care by not providing future care for the nondisabled spouse when necessary. Thus, joint children act as a commitment mechanism, increasing the probability that elderly spouses will provide care for each other; stepchildren with weak attachments to their parents provide weaker incentives for spousal care than joint children. Using data from the HRS, we find evidence that spouses provide more care when they have children with strong parental attachment.
Handle: RePEc:nbr:nberwo:14328
Template-Type: ReDIF-Paper 1.0
Title: Wage Formation between Newly Hired Workers and Employers: Survey Evidence
Classification-JEL: E24; J3; J64
Author-Name: Robert E. Hall
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: EFG LS
Number: 14329
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14329
File-URL: http://www.nber.org/papers/w14329.pdf
File-Format: application/pdf
Abstract: Some workers bargain with prospective employers before accepting a job. Others could bargain, but find it undesirable, because their right to bargain has induced a sufficiently favorable offer, which they accept. Yet others perceive that they cannot bargain over pay; they regard the posted wage as a take-it-or-leave-it opportunity. Theories of wage formation point to substantial differences in labor-market equilibrium between bargained and posted wages. The fraction of workers hired away from existing jobs is another key determinant of equilibrium, because a worker with an existing job has a better outside option in bargaining than does an unemployed worker. Our survey measures the incidences of wage posting, bargaining, and on-the-job search. We find that about a third of workers had precise information about pay when they first met with their employers, a sign of wage posting. We find that another third bargained over pay before accepting their current jobs. And about 40 percent of workers could have remained on their earlier jobs at the time they accepted their current jobs.
Handle: RePEc:nbr:nberwo:14329
Template-Type: ReDIF-Paper 1.0
Title: Simple Humans, Complex Insurance, Subtle Subsidies
Classification-JEL: D80; H2; I11
Author-Name: Jeffrey Liebman
Author-Person: pli184
Author-Name: Richard Zeckhauser
Author-Person: pze7
Note: EH PE
Number: 14330
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14330
File-URL: http://www.nber.org/papers/w14330.pdf
File-Format: application/pdf
Abstract: The behavioral revolution in economics has demonstrated that human beings often have difficulty making wise choices. The most widely chronicled difficulties arise for decisions made under conditions of uncertainty, those whose consequences unfold over significant amounts of time, and decisions made in complex environments. Unfortunately, these are precisely the elements involved when individuals choose a health insurance policy, or decide whether to consume health care services. In this paper, we argue that traditional economic models of insurance are woefully insufficient for analyzing the tradeoffs inherent when giving consumers responsibility for making health care choices. We show that behavioral economics provides a stronger normative justification for many features of our existing health care policy than do the models of traditional economics. We then demonstrate that policy analyses of the wide range of subsidies that permeate the health care system change substantially when viewed from the behavioral perspective. In closing, we discuss how recent policy trends can be fruitfully assessed using a behavioral lens.
Handle: RePEc:nbr:nberwo:14330
Template-Type: ReDIF-Paper 1.0
Title: Managerial Incentives and Value Creation: Evidence from Private Equity
Classification-JEL: G3; J33; L20; M52
Author-Name: Phillip Leslie
Author-Name: Paul Oyer
Author-Person: poy2
Note: CF IO LE LS
Number: 14331
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14331
File-URL: http://www.nber.org/papers/w14331.pdf
File-Format: application/pdf
Abstract: We analyze the differences between companies owned by private equity (PE) investors and similar public companies. We document that PE-owned companies use much stronger incentives for their top executives and have substantially higher debt levels. However, we find little evidence that PE-owned firms outperform public firms in profitability or operational efficiency. We also show that the compensation and debt differences between PE-owned companies and public companies disappear over a very short period (one to two years) after the PE-owned firm goes public. Our results raise questions about whether and how PE firms and the incentives they put in place create value.
Handle: RePEc:nbr:nberwo:14331
Template-Type: ReDIF-Paper 1.0
Title: Managing Contribution and Capital Market Risk in a Funded Public Defined Benefit Plan: Impact of CVaR Cost Constraints
Classification-JEL: G11; G15; G2; G23; H3; H55; H71; J26; J32
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Ralph Rogalla
Note: AG LS PE
Number: 14332
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14332
File-URL: http://www.nber.org/papers/w14332.pdf
File-Format: application/pdf
Publication-Status: published as Maurer, Raimond & Mitchell, Olivia S. & Rogalla, Ralph, 2009. "Managing contribution and capital market risk in a funded public defined benefit plan: Impact of CVaR cost constraints," Insurance: Mathematics and Economics, Elsevier, vol. 45(1), pages 25-34, August.
Abstract: Using a Monte Carlo framework, we analyze the risks and rewards of moving from an unfunded defined benefit pension system to a funded plan for German civil servants, allowing for alternative strategic contribution and investment patterns. In the process we integrate a Conditional Value at Risk (CVaR) restriction on overall plan costs into the pension manager's objective of controlling contribution rate volatility. After estimating the contribution rate that would fully fund future benefit promises for current and prospective employees, we identify the optimal contribution and investment strategy that minimizes contribution rate volatility while restricting worst-case plan costs. Finally, we analyze the time path of expected and worst-case contribution rates to assess the chances of reduced contribution rates for current and future generations. Our results show that moving toward a funded public pension system can be beneficial for both civil servants and taxpayers.
Handle: RePEc:nbr:nberwo:14332
Template-Type: ReDIF-Paper 1.0
Title: Socioeconomic Status and Health: Dimensions and Mechanisms
Classification-JEL: I1
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Author-Name: Tom Vogl
Note: AG EH
Number: 14333
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14333
File-URL: http://www.nber.org/papers/w14333.pdf
File-Format: application/pdf
Publication-Status: published as Socioeconomic Status and Health: Dimensions and Mechanisms Oxford Handbook of Health Economics, 2011, with D. Cutler and A. Lleras-Muney.
Abstract: This paper reviews the evidence on the well-known positive association between socioeconomic status and health. We focus on four dimensions of socioeconomic status -- education, financial resources, rank, and race and ethnicity -- paying particular attention to how the mechanisms linking health to each of these dimensions diverge and coincide. The extent to which socioeconomic advantage causes good health varies, both across these four dimensions and across the phases of the lifecycle. Circumstances in early life play a crucial role in determining the co-evolution of socioeconomic status and health throughout adulthood. In adulthood, a considerable part of the association runs from health to socioeconomic status, at least in the case of wealth. The diversity of pathways casts doubt upon theories that treat socioeconomic status as a unified concept.
Handle: RePEc:nbr:nberwo:14333
Template-Type: ReDIF-Paper 1.0
Title: Commodity Exports, Invisible Exports and Terms of Trade for the Middle Colonies, 1720 to 1775
Classification-JEL: N11; N21; N7; N71
Author-Name: Peter Mancall
Author-Name: Joshua Rosenbloom
Author-Person: pro664
Author-Name: Thomas J. Weiss
Author-Person: pwe260
Note: DAE
Number: 14334
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14334
File-URL: http://www.nber.org/papers/w14334.pdf
File-Format: application/pdf
Abstract: Economic historians of the eighteenth-century British mainland North American colonies have given considerable weight to the role of exports as a stimulus for economic growth. Yet their analyses have been handicapped by reliance on one or two time series to serve as indicators of broader changes rather than considering the export sector as a whole. Here we present new comprehensive export measures for the middle colonies. We find that aggregate exports in constant prices grew very quickly, but barely faster than population during the period under consideration. Furthermore, improvements in the terms of trade increased the colonists' ability to buy imports over time, especially after 1740. Although the export sector performed well, it constituted a relatively small part of the region's economy. It is uncertain if this export success was sufficient to propel the entire economy at a rate that exceeded the growth of population.
Handle: RePEc:nbr:nberwo:14334
Template-Type: ReDIF-Paper 1.0
Title: The Efficacy of Parochial Politics: Caste, Commitment, and Competence in Indian Local Governments
Classification-JEL: D72; H1; O12
Author-Name: Kaivan Munshi
Author-Person: pmu269
Author-Name: Mark Rosenzweig
Author-Person: pro558
Note: EFG PE POL
Number: 14335
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14335
File-URL: http://www.nber.org/papers/w14335.pdf
File-Format: application/pdf
Abstract: Parochial politics is typically associated with poor leadership and low levels of public good provision. This paper explores the possibility that community involvement in politics need not necessarily worsen governance and, indeed, can be efficiency-enhancing when the context is appropriate. Complementing the new literature on the role of community networks in solving market problems, we test the hypothesis that strong traditional social institutions can discipline the leaders they put forward, successfully substituting for secular political institutions when they are ineffective. Using new data on Indian local governments at the ward level over multiple terms, and exploiting the randomized election reservation system, we find that the presence of a numerically dominant sub-caste (caste equilibrium) is associated with the selection of leaders with superior observed characteristics and with greater public good provision. This improvement in leadership competence occurs without apparently diminishing leaders' responsiveness to their constituency.
Handle: RePEc:nbr:nberwo:14335
Template-Type: ReDIF-Paper 1.0
Title: International Financial Remoteness and Macroeconomic Volatility
Classification-JEL: E32; F32
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: IFM
Number: 14336
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14336
File-URL: http://www.nber.org/papers/w14336.pdf
File-Format: application/pdf
Publication-Status: published as Rose, Andrew K. & Spiegel, Mark M., 2009. "International financial remoteness and macroeconomic volatility," Journal of Development Economics, Elsevier, vol. 89(2), pages 250-257, July.
Abstract: This paper shows that proximity to major international financial centers seems to reduce business cycle volatility. In particular, we show that countries that are further from major locations of international financial activity systematically experience more volatile growth rates in both output and consumption, even after accounting for political institutions, trade, and other controls. Our results are relatively robust in the sense that more financially remote countries are more volatile, though the results are not always statistically significant. The comparative strength of this finding is in contrast to the more ambiguous evidence found in the literature.
Handle: RePEc:nbr:nberwo:14336
Template-Type: ReDIF-Paper 1.0
Title: Imitative Obesity and Relative Utility
Classification-JEL: D01; I12; I31
Author-Name: David G. Blanchflower
Author-Person: pbl22
Author-Name: Andrew J. Oswald
Author-Name: Bert Van Landeghem
Note: EH LS
Number: 14337
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14337
File-URL: http://www.nber.org/papers/w14337.pdf
File-Format: application/pdf
Publication-Status: published as David G. Blanchflower & Andrew J. Oswald & Bert Van Landeghem, 2009. "Imitative Obesity and Relative Utility," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 528-538, 04-05.
Abstract: If human beings care about their relative weight, a form of imitative obesity can emerge (in which people subconsciously keep up with the weight of the Joneses). Using Eurobarometer data on 29 countries, this paper provides cross-sectional evidence that overweight perceptions and dieting are influenced by a person's relative BMI, and longitudinal evidence from the German Socioeconomic Panel that well-being is influenced by relative BMI. Highly educated people see themselves as fatter -- at any given actual weight -- than those with low education. These results should be treated cautiously, and fixed-effects estimates are not always well-determined, but there are grounds to take seriously the possibility of socially contagious obesity.
Handle: RePEc:nbr:nberwo:14337
Template-Type: ReDIF-Paper 1.0
Title: Gender Differences in Market Competitiveness in a Real Workplace: Evidence from Performance-based Pay Tournaments among Teachers
Classification-JEL: I2; I21; J00; J16; J18; J33
Author-Name: Victor Lavy
Author-Person: pla111
Note: ED LS
Number: 14338
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14338
File-URL: http://www.nber.org/papers/w14338.pdf
File-Format: application/pdf
Publication-Status: published as Victor Lavy, 2013. "Gender Differences in Market Competitiveness in a Real Workplace: Evidence from Performance‐based Pay Tournaments among Teachers," Economic Journal, Royal Economic Society, vol. 123(569), pages 540-573, 06.
Abstract: Recent lab and field experiments suggest that women are less effective than men in a competitive environment. In this paper I examine how individual performance in a real work place is affected by a competitive environment and by its gender mix. The competition is among math, English and Language teachers who participated in a rank order tournament that rewarded teachers with large cash bonuses based on the test performance of their classes. The evidence suggest that the average ranking, winning rate and awarded prize did not differ by gender nor between teachers in competition groups with only female teachers or with both genders. I also find that the direct impact of the bonus program on students' outcomes did not vary by male and female teachers or by the type of competitive environment in terms of gender mix of the participants. As for mechanisms that can explain these results, I found no differences by either gender or by the gender mix of the competition group in teachers' awareness and familiarity with the program and its rules, and in effort and teaching methods. Women though were more pessimistic about the effectiveness of teachers' performance pay and more realistic than men about their likelihood of winning bonuses.
Handle: RePEc:nbr:nberwo:14338
Template-Type: ReDIF-Paper 1.0
Title: Leadership, Coordination and Mission-Driven Management
Classification-JEL: D21; D23; D7
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: CF
Number: 14339
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14339
File-URL: http://www.nber.org/papers/w14339.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economic Studies (2012) doi: 10.1093/restud/rds041 First published online: December 5, 2012
Abstract: What makes a good leader? A good leader is able to coordinate his followers around a credible mission statement, which communicates the future course of action of the organization. In practice, leaders learn about the best course of action for the organization over time. While learning helps improve the organization's goals it also creates a time-consistency problem. Leader resoluteness is a valuable attribute in such a setting, since it slows down the leader's learning and thus improves the credibility of the mission statement. But resolute leaders also inhibit communication with followers and leader resoluteness is costly when followers have sufficiently valuable signals.
Handle: RePEc:nbr:nberwo:14339
Template-Type: ReDIF-Paper 1.0
Title: Asset Management, Human Capital, and the Market for Risky Assets
Classification-JEL: G00; G11; G12; I0; I20; J24
Author-Name: Isaac Ehrlich
Author-Person: peh1
Author-Name: William A. Hamlen Jr.
Author-Name: Yong Yin
Author-Person: pyi17
Note: AP ED LS
Number: 14340
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14340
File-URL: http://www.nber.org/papers/w14340.pdf
File-Format: application/pdf
Publication-Status: published as Isaac Ehrlich, William A. Hamlen Jr., and Yong Yin, "Asset Management, Human Capital, and the Market for Risky Assets", Journal of Human Capital, 2008, 2(3): 217-261.
Abstract: Risky-asset prices are conventionally modeled as "fully (information-) revealing". Much less work has been done on how prices get to reveal information. Following the "noisy-prices", rational-expectations approach, our answer focuses on the micro-foundations of information acquisition and the role of human capital in asset, or risk, management. We derive testable propositions on how education and other determinants of asset management affect its intensity, risky-asset demand, and portfolio returns. We derive related insights concerning determinants of the level and volatility of asset prices and equity premiums. Using micro-level data on portfolio choices, we find that education raises both the portfolio share of risky assets and overall portfolio returns, while a measure of the opportunity cost of asset management has the opposite effects. Our results indicate a non-trivial return to education in generating non-wage income. They suggest that educational attainments directly affect the distribution of income as well as earnings.
Handle: RePEc:nbr:nberwo:14340
Template-Type: ReDIF-Paper 1.0
Title: Secrets of the Academy: The Drivers of University Endowment Success
Classification-JEL: G11; L3
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Jialan Wang
Author-Person: pwa486
Note: CF
Number: 14341
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14341
File-URL: http://www.nber.org/papers/w14341.pdf
File-Format: application/pdf
Publication-Status: published as Josh Lerner & Antoinette Schoar & Jialan Wang, 2008. "Secrets of the Academy: The Drivers of University Endowment Success," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 207-22, Summer.
Abstract: In recent years, university endowments have received much attention for their spectacular returns and innovative investment strategies, but few papers have examined trends in the endowment sector at large. In this paper, we analyze a sample of 1,300 educational endowments between 1992 and 2005. A striking phenomenon emerges of the "rich getting richer", a dramatic widening of the size gap between the largest endowments, led by the Ivy League, and the average endowment. Growth in endowment size has been driven largely by high investment returns, which are in turn related to the quality of the student body and the use of alternative assets. Elite endowments seem to benefit not only from economies of scale in investment management, but genuine skill and expertise in choosing the right investments at the right times.
Handle: RePEc:nbr:nberwo:14341
Template-Type: ReDIF-Paper 1.0
Title: Costly External Finance: Implications for Capital Markets Anomalies
Classification-JEL: G12; G14
Author-Name: Dongmei Li
Author-Person: pli635
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF EFG
Number: 14342
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14342
File-URL: http://www.nber.org/papers/w14342.pdf
File-Format: application/pdf
Abstract: In a frictionless world, investment is perfectly elastic to changes in the discount rate. With financial frictions, investment is less elastic, meaning that a given magnitude of change in investment is associated with a higher magnitude of change in the discount rate. Equivalently, investment is a more powerful predictor of future stock returns. Consistent with this prediction, we document that the asset growth, external finance, and accrual anomalies in the cross-section of stock returns are much stronger in financially more constrained firms than in financially less constrained firms. Further tests show that this effect of financial constraints is distinct from the effect of financial distress and the effect of limits of arbitrage on the magnitude of the anomalies.
Handle: RePEc:nbr:nberwo:14342
Template-Type: ReDIF-Paper 1.0
Title: The Intergenerational Transfer of Public Pension Promises
Classification-JEL: G11; G23; G28; H55; H60; H68; H72; H74
Author-Name: Robert Novy-Marx
Author-Name: Joshua D. Rauh
Note: AG AP CF PE
Number: 14343
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14343
File-URL: http://www.nber.org/papers/w14343.pdf
File-Format: application/pdf
Abstract: The value of pension promises already made by US state governments will grow to approximately $7.9 trillion in 15 years. We study investment strategies of state pension plans and estimate the distribution of future funding outcomes. We conservatively predict a 50% chance of aggregate underfunding greater than $750 billion and a 25% chance of at least $1.75 trillion (in 2005 dollars). Adjusting for risk, the true intergenerational transfer is substantially larger. Insuring both taxpayers against funding deficits and plan participants against benefit reductions would cost almost $2 trillion today, even though governments portray state pensions as almost fully funded.
Handle: RePEc:nbr:nberwo:14343
Template-Type: ReDIF-Paper 1.0
Title: The Internationalization of Venture Capital and Private Equity
Classification-JEL: F15; F21
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Jake Kendall
Author-Person: pke146
Note: ITI
Number: 14344
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14344
File-URL: http://www.nber.org/papers/w14344.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman, Jake Kendall, (2012) "The internationalization of venture capital", Journal of Economic Studies, Vol. 39 Iss: 5, pp.488 - 511
Abstract: This paper investigates the internationalization of venture capital (VC) and private equity (PE) investments. We derive flows between countries of VC and PE investments worldwide, relying on comprehensive firm-level data sources, covering three decades and about 100 countries. A gravity analysis indicates that distance, common language, and colonial ties are significant factors in directing these flows. Additionally, the presence of high-end human capital, a better business environment, high levels of military expenditure, and deeper financial markets are important local factors that attract international venture capital. There is also evidence of path dependency and persistence in VC and PE flows, indicating network effects and fixed costs of entry may be at work. Further analysis suggests the internalization of VC and PE is an ongoing story. Prior to the 1990s, VC was primarily a US-only phenomenon. The globalization of IT activities induced the US venture capital industry to mature, and to start exporting its unique skills as VC managers. The US is now a dominant net exporter of deals, though most crossborder deals are still either to or from the US. China has emerged as the dominant net importer, followed by Sweden, Canada, the UK, France and India. For deals outside the US, cross-border participation has been the norm, while US-located deals have been almost exclusively domestic, involving a higher percent of international participation only after 2001. In the past few years, domestic VC capacity has begun to emerge in many countries where it did not exist previously.
Handle: RePEc:nbr:nberwo:14344
Template-Type: ReDIF-Paper 1.0
Title: Economic Factors Underlying the Unbundling of Advertising Agency Services
Classification-JEL: D4; L84; M37
Author-Name: Mohammad Arzaghi
Author-Name: Ernst R. Berndt
Author-Name: James C. Davis
Author-Person: pda194
Author-Name: Alvin J. Silk
Note: EFG
Number: 14345
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14345
File-URL: http://www.nber.org/papers/w14345.pdf
File-Format: application/pdf
Abstract: This paper addresses a longstanding puzzle involving the unbundling of services that has occurred over more than two decades in the U.S. advertising agency industry: How can the shift from the bundling to the unbundling of services be explained and what accounts for the slow pace of change? Using a cost-based theoretical framework of bundling due to Evans and Salinger (2005, 2008), we develop a simple model of an advertising agency's decision to unbundle its services as a tradeoff between the fixed cost to the advertiser of establishing and maintaining a relationship with an advertising agency and pecuniary economies of scale available in providing media services. The results from an econometric analysis of cross-sectional and pooled data collected by the U.S. Census Bureau for quinquennial censuses conducted between 1982 and 2002 support the key predictions of the model. We find that advertising agency establishments are more likely to unbundle if they are large and diversified in their service offerings and are less likely to do so with increasing age and greater geographical scope. We also find a strong trend toward unbundling over time, a result that is partially explained by increases in media prices over time.
Handle: RePEc:nbr:nberwo:14345
Template-Type: ReDIF-Paper 1.0
Title: Divorce Law and Women's Labor Supply
Classification-JEL: D1; J1; J2; K36; N3
Author-Name: Betsey Stevenson
Author-Person: pst145
Note: DAE LE LS
Number: 14346
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14346
File-URL: http://www.nber.org/papers/w14346.pdf
File-Format: application/pdf
Publication-Status: published as Divorce Law and Women's Labor Supply Betsey Stevenson* Article first published online: 3 DEC 2008 DOI: 10.1111/j.1740-1461.2008.00143.x © 2008, Copyright the Author. Journal compilation © 2008, Cornell Law School and Wiley Periodicals, Inc. Issue Journal of Empirical Legal Studies Journal of Empirical Legal Studies Volume 5, Issue 4, pages 853–873, December 2008
Abstract: Divorce law changes made in the 1970s affected marital formation, dissolution, and bargaining within marriage. By altering the terms of the marital contract these legal changes impacted the incentives for women to enter and remain in the labor force. Whereas earlier work had suggested that the impact of unilateral divorce on female employment depended critically on laws governing property division, I show that these results are not robust to alternative specifications and controls. I find instead that unilateral divorce led to an increase in both married and unmarried female labor force participation, regardless of the pre-existing laws regarding property division.
Handle: RePEc:nbr:nberwo:14346
Template-Type: ReDIF-Paper 1.0
Title: Landed Interests and Financial Underdevelopment in the United States
Classification-JEL: G20; O16; O43
Author-Name: Raghuram G. Rajan
Author-Person: pra149
Author-Name: Rodney Ramcharan
Author-Person: pra554
Note: CF POL
Number: 14347
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14347
File-URL: http://www.nber.org/papers/w14347.pdf
File-Format: application/pdf
Abstract: Landed elites in the United States in the early decades of the twentieth century played a significant role in restricting the development of finance. States that had higher land concentration passed more restrictive banking legislation. At the county level, counties with very concentrated land holdings tended to have disproportionately fewer banks per capita. Banks were especially scarce both when landed elites' incentive to suppress finance, as well as their ability to exercise local influence, was higher. Finally, the resulting financial underdevelopment was negatively correlated with subsequent manufacturing growth. We draw lessons from this episode for understanding economic development.
Handle: RePEc:nbr:nberwo:14347
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Labor Market Intermediation: An Analytic Framework
Classification-JEL: J4; J5; J6
Author-Name: David H. Autor
Author-Person: pau9
Note: LS
Number: 14348
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14348
File-URL: http://www.nber.org/papers/w14348.pdf
File-Format: application/pdf
Publication-Status: published as Introduction to "Studies of Labor Market Intermediation", David H. Autor. in Studies of Labor Market Intermediation , Autor. 2009
Abstract: Labor Market Intermediaries (LMIs) are entities or institutions that interpose themselves between workers and firms to facilitate, inform, or regulate how workers are matched to firms, how work is accomplished, and how conflicts are resolved. This paper offers a conceptual foundation for analyzing the market role played by these understudied institutions, and to develop a qualitative and, in some cases, quantitative sense of their significance to market operation and welfare. Though heterogeneous, I argue that LMIs share a common function, which is to redress -- and in some cases exploit -- a set of endemic departures of labor market operation from the efficient neoclassical benchmark. At a rudimentary level, LMIs such as online job boards reduce search frictions by aggregating and reselling disparate information at a cost below which workers and firms could obtain themselves. Beyond passively supplying information, a set of LMIs forcibly redress adverse selection problems in labor markets by compelling workers and firms to reveal normally hidden credentials, such as criminal background, academic standing, or financial integrity. At their most forceful, LMIs such as labor unions and centralized job matching clearinghouses, resolve coordination and collective action failures in markets by tightly controlling -- even monopolizing -- the process by which workers and firms meet, match and negotiate. A unifying observation of the analytic framework is that participation in the activities of a given LMI are typically voluntary for one side of the market and compulsory for the other; workers cannot, for example, elect to suppress their criminal records and firms cannot opt out of collective bargaining. I argue that the nature of participation in an LMI's activities -- voluntary or compulsory, and for which parties -- is dictated by the market imperfection that it addresses and thus tells us much about its economic function.
Handle: RePEc:nbr:nberwo:14348
Template-Type: ReDIF-Paper 1.0
Title: Real-Time Measurement of Business Conditions
Classification-JEL: C01; C22; E32; E37
Author-Name: S. Boragan Aruoba
Author-Person: par34
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Chiara Scotti
Author-Person: psc465
Note: EFG
Number: 14349
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14349
File-URL: http://www.nber.org/papers/w14349.pdf
File-Format: application/pdf
Publication-Status: published as Aruoba, S. BoraÄŸan & Diebold, Francis X. & Scotti, Chiara, 2009. "Real-Time Measurement of Business Conditions," Journal of Business & Economic Statistics, American Statistical Association, vol. 27(4), pages 417-427.
Abstract: We construct a framework for measuring economic activity at high frequency, potentially in real time. We use a variety of stock and flow data observed at mixed frequencies (including very high frequencies), and we use a dynamic factor model that permits exact filtering. We illustrate the framework in a prototype empirical example and a simulation study calibrated to the example.
Handle: RePEc:nbr:nberwo:14349
Template-Type: ReDIF-Paper 1.0
Title: Demanding Customers: Consumerist Patients and Quality of Care
Classification-JEL: D82; I11; I12
Author-Name: Hai Fang
Author-Name: Nolan H. Miller
Author-Name: John A. Rizzo
Author-Person: pri334
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: EH
Number: 14350
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14350
File-URL: http://www.nber.org/papers/w14350.pdf
File-Format: application/pdf
Publication-Status: published as Hai Fang & Nolan H. Miller & John Rizzo & Richard Zeckhauser, 2011. "Demanding Customers: Consumerist Patients and Quality of Care," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 11(1), pages 59.
Abstract: Consumerism arises when patients acquire and use medical information from sources apart from their physicians, such as the Internet and direct-to-patient advertising. Consumerism has been hailed as a means of improving quality. This need not be the result. Consumerist patients place additional demands on their doctors' time, thus imposing a negative externality on other patients. Our theoretical model has the physician treat both consumerist and ordinary patient under a binding time budget. Relative to a world in which consumerism does not exist, consumerism is never Pareto improving, and in some cases harms both consumerist and ordinary patients. Data from a large national survey of physicians shows that high levels of consumerism are associated with lower perceived quality. Three different measures of quality were employed. The analysis uses instrumental variables to control for the endogeneity of consumerism. A control function approach is employed, since our dependent variable is ordered and categorical, not continuous.
Handle: RePEc:nbr:nberwo:14350
Template-Type: ReDIF-Paper 1.0
Title: Costly Financial Intermediation in Neoclassical Growth Theory
Classification-JEL: E2; E44; E6; G1; G11; G12; G23
Author-Name: Rajnish Mehra
Author-Person: pme56
Author-Name: Facundo Piguillem
Author-Name: Edward C. Prescott
Author-Person: ppr10
Note: AP EFG
Number: 14351
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14351
File-URL: http://www.nber.org/papers/w14351.pdf
File-Format: application/pdf
Publication-Status: published as Rajnish Mehra & Facundo Piguillem & Edward C. Prescott, 2011. "Costly financial intermediation in neoclassical growth theory," Quantitative Economics, Econometric Society, vol. 2(1), pages 1-36, 03.
Abstract: The neoclassical growth model is extended to include costly intermediated borrowing and lending between households. This is an important extension as substantial resources are used in intermediating the large amount of borrowing and lending between households. In 2007, in the United States, the amount intermediated was 1.7 times GNP, and the resources used in this intermediation amounted to at least 3.4 percent of GNP. The theory implies that financial intermediation services are an intermediate good and that the spread between borrowing and lending rates measures the efficiency of the financial sector.
Handle: RePEc:nbr:nberwo:14351
Template-Type: ReDIF-Paper 1.0
Title: Fetal Exposure to Toxic Releases and Infant Health
Classification-JEL: I18; Q53
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Johannes F. Schmieder
Note: CH EEE EH PE
Number: 14352
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14352
File-URL: http://www.nber.org/papers/w14352.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Johannes F. Schmieder, 2009. "Fetal Exposures to Toxic Releases and Infant Health," American Economic Review, American Economic Association, vol. 99(2), pages 177-83, May.
Abstract: Every year, millions of pounds of toxic chemicals thought to be linked to developmental problems in fetuses and young children are released into the air. In this paper we estimate the effect of these releases on the health of newborns. Using data from the Toxic Release Inventory Program and Vital Statistics Natality and Mortality files, we find significant negative effects of prenatal exposure to toxicants on gestation and birth weight. We also find that several developmental chemicals increase the probability of infant death. The effect is quite sizeable: the reported reductions in cadmium, toluene, and epichlorohydrin releases during the 90s could account for about 3.9 percent of the overall decrease in infant mortality. Our results are robust to several specification checks, such as comparing developmental to non-developmental chemicals, and fugitive air releases to stack air releases.
Handle: RePEc:nbr:nberwo:14352
Template-Type: ReDIF-Paper 1.0
Title: Measuring intertemporal preferences using response times
Classification-JEL: C0; D01; D87; D9
Author-Name: Christopher F. Chabris
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Carrie L. Morris
Author-Name: Jonathon P. Schuldt
Author-Name: Dmitry Taubinsky
Note: EH LS PE
Number: 14353
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14353
File-URL: http://www.nber.org/papers/w14353.pdf
File-Format: application/pdf
Abstract: We use two different approaches to measure intertemporal preferences. First we employ the classical method of inferring preferences from a series of choices (subjects choose between $X now or $Y in D days). Second we adopt the novel approach of inferring preferences using only response time data from the same choices (how long it takes subjects to choose between $X now or $Y in D days). In principle, the inference from response times should work, since choices between items of nearly equivalent value should take longer than choices between items with substantially different values. We find that choice-based analysis and response-time-based analysis yield nearly identical discount rate estimates. We conclude that response time data sheds light on both our revealed (choice-based) preferences and on the cognitive processes that implement those preferences.
Handle: RePEc:nbr:nberwo:14353
Template-Type: ReDIF-Paper 1.0
Title: Peer Effects and Human Capital Accumulation: the Externalities of ADD
Classification-JEL: I1; I18; I2
Author-Name: Anna Aizer
Author-Person: pai9
Note: CH ED EH LS PE
Number: 14354
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14354
File-URL: http://www.nber.org/papers/w14354.pdf
File-Format: application/pdf
Abstract: Recent work shows that peers affect student achievement, but the mechanisms are not well understood. I show that peer behavior is an important mechanism, perhaps more so than ability, by exploiting exogenous timing in diagnosis/treatment of ADD among peers that improves peer behavior while holding peer achievement constant. Improvements in peer behavior increase student achievement. Moreover, resources mitigate the negative effects of peer behavior. These findings imply that the optimal response in the presence of peer effects is not necessarily to reorganize classrooms. Rather, existing institutions can modify peer effects by improving behavior and/or mitigating the impact of poor behavior.
Handle: RePEc:nbr:nberwo:14354
Template-Type: ReDIF-Paper 1.0
Title: Trades of the Living Dead: Style Differences, Style Persistence and Performance of Currency Fund Managers
Classification-JEL: F31; G11; G15
Author-Name: Momtchil Pojarliev
Author-Name: Richard M. Levich
Note: IFM
Number: 14355
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14355
File-URL: http://www.nber.org/papers/w14355.pdf
File-Format: application/pdf
Publication-Status: published as Pojarliev, Momtchil & Levich, Richard M., 2010. "Trades of the living dead: Style differences, style persistence and performance of currency fund managers," Journal of International Money and Finance, Elsevier, vol. 29(8), pages 1752-1775, December.
Abstract: We make use of a new database on daily currency fund manager returns over a three-year period, 2005-08. This higher frequency data allows us to estimate both alpha measures of performance and beta style factors on a yearly basis, which in turn allows us to test for persistence. We find no evidence to support alpha persistence; a manager's alpha in one year is not significantly related to his alpha in the prior year. On the other hand, there is substantial evidence for style persistence; funds that rely on carry, trend or value trading or with a long/short bias toward currency volatility are likely to maintain that style in the following year. In addition, we are able to examine the performance of managers that survive through the entire sample period, versus those that drop out. We find significant differences in both the investment styles of living versus deceased funds, as well as their realized alpha performance measures. We conjecture that both style differences and ineffective market timing, rather than market conditions, have impacted performance outcomes and induced some managers to close their funds.
Handle: RePEc:nbr:nberwo:14355
Template-Type: ReDIF-Paper 1.0
Title: Field Experiments in Economics: The Past, The Present, and The Future
Classification-JEL: C9; C93; D0; H0
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Note: EEE PE
Number: 14356
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14356
File-URL: http://www.nber.org/papers/w14356.pdf
File-Format: application/pdf
Publication-Status: published as Levitt, Steven D. & List, John A., 2009. "Field experiments in economics: The past, the present, and the future," European Economic Review, Elsevier, vol. 53(1), pages 1-18, January.
Abstract: This study presents an overview of modern field experiments and their usage in economics. Our discussion focuses on three distinct periods of field experimentation that have influenced the economics literature. The first might well be thought of as the dawn of "field" experimentation: the work of Neyman and Fisher, who laid the experimental foundation in the 1920s and 1930s by conceptualizing randomization as an instrument to achieve identification via experimentation with agricultural plots. The second, the large-scale social experiments conducted by government agencies in the mid-twentieth century, moved the exploration from plots of land to groups of individuals. More recently, the nature and range of field experiments has expanded, with a diverse set of controlled experiments being completed outside of the typical laboratory environment. With this growth, the number and types of questions that can be explored using field experiments has grown tremendously. After discussing these three distinct phases, we speculate on the future of field experimental methods, a future that we envision including a strong collaborative effort with outside parties, most importantly private entities.
Handle: RePEc:nbr:nberwo:14356
Template-Type: ReDIF-Paper 1.0
Title: Design Limits and Dynamic Policy Analysis
Classification-JEL: C6; E52
Author-Name: William A. Brock
Author-Person: pbr142
Author-Name: Steven N. Durlauf
Author-Person: pdu117
Author-Name: Giacomo Rondina
Note: EFG ME
Number: 14357
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14357
File-URL: http://www.nber.org/papers/w14357.pdf
File-Format: application/pdf
Publication-Status: published as Brock, William A. & Durlauf, Steven N. & Rondina, Giacomo, 2013. "Design limits and dynamic policy analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2710-2728.
Abstract: This paper characterizes the frequency domain properties of feedback control rules in linear systems in order to better understand how different policies affect outcomes frequency by frequency. We are especially concerned in understanding how reductions of variance at some frequencies induce increases in variance at others. Tradeoffs of this type are known in the control literature as design limits. Design limits are important in understanding the full range of effects of macroeconomic stabilization policies. We extend existing results to account for discrete time bivariate systems with rational expectations. Application is made to the evaluation of monetary policy rules.
Handle: RePEc:nbr:nberwo:14357
Template-Type: ReDIF-Paper 1.0
Title: The Panic of 2007
Classification-JEL: E1; E32; G2
Author-Name: Gary B. Gorton
Author-Person: pgo458
Note: AP CF EFG ME
Number: 14358
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14358
File-URL: http://www.nber.org/papers/w14358.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton, 2009. "Information, Liquidity, and the (Ongoing) Panic of 2007," American Economic Review, American Economic Association, vol. 99(2), pages 567-72, May.
Publication-Status: published as Gary B. Gorton, 2008. "The panic of 2007," Proceedings â Payments System Research Conferences, Federal Reserve Bank of Kansas City, pages 131-262.
Publication-Status: published as Gary Gorton, 2008. "The panic of 2007," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 131-262.
Abstract: How did problems with subprime mortgages result in a systemic crisis, a panic? The ongoing Panic of 2007 is due to a loss of information about the location and size of risks of loss due to default on a number of interlinked securities, special purpose vehicles, and derivatives, all related to subprime mortgages. Subprime mortgages are a financial innovation designed to provide home ownership opportunities to riskier borrowers. Addressing their risk required a particular design feature, linked to house price appreciation. Subprime mortgages were then financed via securitization, which in turn has a unique design reflecting the subprime mortgage design. Subprime securitization tranches were often sold to CDOs, which were, in turn, often purchased by market value off-balance sheet vehicles. Additional subprime risk was created (though not on net) with derivatives. When the housing price bubble burst, this chain of securities, derivatives, and off-balance sheet vehicles could not be penetrated by most investors to determine the location and size of the risks. The introduction of the ABX indices, synthetics related to portfolios of subprime bonds, in 2006 created common knowledge about the effects of these risks by providing centralized prices and a mechanism for shorting. I describe the relevant securities, derivatives, and vehicles and provide some very simple, stylized, examples to show: (1) how asymmetric information between the sell-side and the buy-side was created via complexity; (2) how the chain of interlinked securities was sensitive to house prices; (3) how the risk was spread in an opaque way; and (4) how the ABX indices allowed information to be aggregated and revealed. I argue that these details are at the heart of the answer to the question of the origin of the Panic of 2007.
Handle: RePEc:nbr:nberwo:14358
Template-Type: ReDIF-Paper 1.0
Title: Policymaking for Posterity
Classification-JEL: D64; D81; D90; Q54
Author-Name: Lawrence H. Summers
Author-Person: psu137
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: EEE IFM
Number: 14359
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14359
File-URL: http://www.nber.org/papers/w14359.pdf
File-Format: application/pdf
Publication-Status: published as Lawrence Summers & Richard Zeckhauser, 2008. "Policymaking for posterity," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 115-140, December.
Abstract: Policymaking for posterity involves current decisions with distant consequences. Contrary to conventional prescriptions, we conclude that the greater wealth of future generations may strengthen the case for preserving environmental amenities; lower discount rates should be applied to the far future, and special effort should be made to avoid actions that impose costs on future generations. -- Posterity brings great uncertainties. Even massive losses, such as human extinction, however, do not merit infinite negative utility. Given learning, greater uncertainties about damages could increase or decrease the optimal level of current mitigation activities. -- Policies for posterity should anticipate effects on: alternative investments, both public and private; the actions of other nations; and the behaviors of future generations. Such effects may surprise. -- This analysis blends traditional public finance and behavioral economics with a number of hypothetical choice problems.
Handle: RePEc:nbr:nberwo:14359
Template-Type: ReDIF-Paper 1.0
Title: Media versus Special Interests
Classification-JEL: L51; N41; P16
Author-Name: Alexander Dyck
Author-Person: pdy5
Author-Name: David Moss
Author-Name: Luigi Zingales
Note: POL
Number: 14360
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14360
File-URL: http://www.nber.org/papers/w14360.pdf
File-Format: application/pdf
Publication-Status: published as Alexander Dyck & David Moss & Luigi Zingales, 2013. "Media versus Special Interests," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 521 - 553.
Abstract: We argue that profit-maximizing media help overcome the problem of "rational ignorance" highlighted by Downs (1957) and in so doing make elected representatives more sensitive to the interests of general voters. By collecting news and combining it with entertainment, media are able to inform passive voters on politically relevant issues. To show the impact this information has on legislative outcomes, we document the effect "muckraking" magazines had on the voting patterns of U.S. representatives and senators in the early part of the 20th century. We also show under what conditions profit-maximizing media will cater to general (less affluent) voters in their coverage, providing a counterbalance to special interests.
Handle: RePEc:nbr:nberwo:14360
Template-Type: ReDIF-Paper 1.0
Title: Forecasting the Cost of U.S. Health Care in 2040
Classification-JEL: I11
Author-Name: Robert W. Fogel
Note: EH
Number: 14361
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14361
File-URL: http://www.nber.org/papers/w14361.pdf
File-Format: application/pdf
Publication-Status: published as Fogel, Robert W., 2009. "Forecasting the cost of U.S. Health Care in 2040," Journal of Policy Modeling, Elsevier, vol. 31(4), pages 482-488, July.
Abstract: One of the most important debates among health economists in rich nations is whether advances in biotechnology will spare their health care systems from a financial crisis. We must consider that prevalence rates of chronic diseases declined during the twentieth century and that this rate of decline has accelerated. However, health care costs may continue to increase even as the age of onset of chronic diseases is delayed, because the proportion of a cohort living to late ages will increase. The accelerating decline in the prevalence of chronic diseases during the course of the twentieth century supports the proposition that increases in life expectancy during the twenty-first century will be fairly large, but the effect on health care in the U.S. will be modest. The income elasticity for health services is calculated at 1.6, meaning that income expenditures on health care in the U.S. are likely to rise from a current level of about 15 percent to about 29 percent of GDP in 2040.
Handle: RePEc:nbr:nberwo:14361
Template-Type: ReDIF-Paper 1.0
Title: Is Sugar Sweeter at the Pump? The Macroeconomic Impact of Brazil's Alternative Energy Program
Classification-JEL: E3; N1
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Author-Name: Joseph H. Davis
Author-Name: Roger Aliaga-Diaz
Author-Person: pal62
Note: DAE EFG ME
Number: 14362
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14362
File-URL: http://www.nber.org/papers/w14362.pdf
File-Format: application/pdf
Abstract: The recent world energy crisis raises serious questions about the extent to which the United States should increase domestic oil production and develop alternative sources of energy. We examine the energy developments in Brazil as an important experiment. Brazil has reduced its share of imported oil more than any other major economy in the world in the last 30 years, from 70 percent in the 1970s to only 10 percent today. Brazil has largely achieved this goal by: (1) increasing domestic oil production and (2) developing one of the world's largest and most competitive sources of renewable energy -- sugarcane ethanol -- that now accounts for 50 percent of Brazil's total gasoline consumption. A counterfactual analysis of economic growth in Brazil from 1980-2008 suggests that GDP is almost 35 percent higher today because of increased domestic oil production and the development of sugarcane ethanol. We also find a notable reduction in business-cycle volatility as a result of Brazil's progression to a more diversified energy program. Nearly three-fourths of the welfare benefits have come from domestic oil drilling, however, as rents have been paid to domestic factors of production during a time of rising oil prices. We discuss the potential implications of Brazil's energy program for the U.S. economy by conducting historical counterfactual exercises on U.S. real GDP growth since the 1970s.
Handle: RePEc:nbr:nberwo:14362
Template-Type: ReDIF-Paper 1.0
Title: Can the West Save Africa?
Classification-JEL: O1; O11; O12; O13; O15; O23; O24; O4; O55
Author-Name: William Easterly
Author-Person: pea1
Note: EFG POL
Number: 14363
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14363
File-URL: http://www.nber.org/papers/w14363.pdf
File-Format: application/pdf
Publication-Status: published as William Easterly, 2009. "Can the West Save Africa?," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 373-447, June.
Abstract: In the new millennium, the Western aid effort towards Africa has surged due to writings by well-known economists, a celebrity mass advocacy campaign, and decisions by Western leaders to make Africa a major foreign policy priority. This survey contrasts the predominant "transformational" approach (West saves Africa) to occasional swings to a "marginal" approach (West takes one small step at a time to help individual Africans). Evaluation of "one step at a time" initiatives is generally easier than that of transformational ones either through controlled experiments (although these have been much oversold) or simple case studies where it is easier to attribute outcomes to actions. We see two themes emerge from the literature survey: (1) escalation. As each successive Western transformational effort has yielded disappointing results, the response has been to try an even more ambitious effort. (2) the cycle of ideas. Rather than a progressive testing and discarding of failed ideas, we see a cycle in aid ideas in many areas in Africa, with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience. Both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the "transformational" approach. In contrast, the "marginal" approach has had some successes in improving the well-being of individual Africans, such as the dramatic fall in mortality.
Handle: RePEc:nbr:nberwo:14363
Template-Type: ReDIF-Paper 1.0
Title: Roy Model Sorting and Non-Random Selection in the Valuation of a Statistical Life
Classification-JEL: J17; J31; Q5; Q51
Author-Name: Thomas DeLeire
Author-Person: pde167
Author-Name: Christopher Timmins
Note: EEE LS
Number: 14364
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14364
File-URL: http://www.nber.org/papers/w14364.pdf
File-Format: application/pdf
Publication-Status: published as Thomas DeLeire & Shakeeb Khan & Christopher Timmins, 2013. "Roy Model Sorting And Nonrandom Selection In The Valuation Of A Statistical Life," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(1), pages 279-306, 02.
Abstract: Wage-hedonics is used to recover the value of a statistical life by exploiting the fact that workers choosing riskier occupations will be compensated with a higher wage. However, Roy (1951) suggests that observed wage distributions will be distorted if individuals select into jobs according to idiosyncratic returns. We illustrate how this type of sorting may bias wage-hedonic VSL estimates and describe two estimators that correct for it. Using data from the CPS, we recover VSL estimates that are three to four times larger than those based on the traditional techniques, statistically significant, and robust to a wide array of specifications.
Handle: RePEc:nbr:nberwo:14364
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Piped Water Provision on Infant Mortality in Brazil: A Quantile Panel Data Approach
Classification-JEL: H41; I18; Q53; Q56; Q58
Author-Name: Shanti Gamper-Rabindran
Author-Name: Shakeeb Khan
Author-Person: pkh401
Author-Name: Christopher Timmins
Note: EEE
Number: 14365
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14365
File-URL: http://www.nber.org/papers/w14365.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Development Economics Volume 92, Issue 2, July 2010, Pages 188–200 Cover image The impact of piped water provision on infant mortality in Brazil: A quantile panel data approach Shanti Gamper-Rabindrana, Corresponding author contact information, E-mail the corresponding author, Shakeeb Khanb, Christopher Timminsb
Abstract: We examine the impact of piped water on the under-1 infant mortality rate (IMR) in Brazil using a novel econometric procedure for the estimation of quantile treatment effects with panel data. The provision of piped water in Brazil is highly correlated with other observable and unobservable determinants of IMR -- the latter leading to an important source of bias. Instruments for piped water provision are not readily available, and fixed effects to control for time invariant correlated unobservables are invalid in the simple quantile regression framework. Using the quantile panel data procedure in Chen and Khan (2007), our estimates indicate that the provision of piped water reduces infant mortality by significantly more at the higher conditional quantiles of the IMR distribution than at the lower conditional quantiles (except for cases of extreme underdevelopment). These results imply that targeting piped water intervention toward areas in the upper quantiles of the conditional IMR distribution, when accompanied by other basic public health inputs, can achieve significantly greater reductions in infant mortality.
Handle: RePEc:nbr:nberwo:14365
Template-Type: ReDIF-Paper 1.0
Title: A Model of Capital and Crises
Classification-JEL: E44; G12; G18; G2
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: AP CF
Number: 14366
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14366
File-URL: http://www.nber.org/papers/w14366.pdf
File-Format: application/pdf
Publication-Status: published as A Model of Capital and Crises, 2012, with Arvind Krishnamurthy, Review of Economic Studies 79(2): pp. 735-777. Presentation Slides.
Abstract: We develop a model in which the capital of the intermediary sector plays a critical role in determining asset prices. The model is cast within a dynamic general equilibrium economy, and the role for intermediation is derived endogenously based on optimal contracting considerations. Low intermediary capital reduces the risk-bearing capacity of the marginal investor. We show how this force helps to explain patterns during financial crises. The model replicates the observed rise during crises in Sharpe ratios, conditional volatility, correlation in price movements of assets held by the intermediary sector, and fall in riskless interest rates.
Handle: RePEc:nbr:nberwo:14366
Template-Type: ReDIF-Paper 1.0
Title: Do Community Colleges provide a Viable Pathway to a Baccalaureate Degree?
Classification-JEL: C1; I2; J24
Author-Name: Bridget Terry Long
Author-Person: plo320
Author-Name: Michal Kurlaender
Note: ED
Number: 14367
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14367
File-URL: http://www.nber.org/papers/w14367.pdf
File-Format: application/pdf
Publication-Status: published as Long, B. T. and Michal Kurlaender. (2009) “Do Community Colleges provide a Viable Pathway to a Baccalaureate Degree?” Educational Evaluation and Policy Analysis 31(1): 30-53.
Abstract: Community colleges have become an important entryway for students intending to complete a baccalaureate degree. However, many question the viability of the transfer function and wonder whether students suffer a penalty for starting at a two-year institution. This paper examines how the outcomes of community college entrants compare to similar students who initially entered four-year institutions within the Ohio public higher education system. Using a detailed dataset, we track outcomes for nine years and employ multiple strategies to deal with selection issues: propensity score matching and instrumental variables. The results suggest that straightforward estimates are significantly biased, but even after accounting for selection, students who initially begin at a community college were 14.5 percent less likely to complete a bachelor's degree within nine years.
Handle: RePEc:nbr:nberwo:14367
Template-Type: ReDIF-Paper 1.0
Title: An Experimental Component Index for the CPI: From Annual Computer Data to Monthly Data on Other Goods
Classification-JEL: E31; L11; L16
Author-Name: Timothy Erickson
Author-Name: Ariel Pakes
Author-Person: ppa20
Note: IO PR
Number: 14368
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14368
File-URL: http://www.nber.org/papers/w14368.pdf
File-Format: application/pdf
Publication-Status: published as Pakes A, Erickson T. An Experimental Component Index for the CPI: From Annual Computer Data to Monthly Data on Other Goods. American Economic Review. 2011;101(5):1707-1738.
Abstract: Until recently the Consumer Price Index consisted solely of "matched model" component indexes. The latter are constructed by BLS personnel who visit stores and compare prices of goods with the same set of characteristics over successive periods. This procedure is subject to a selection bias. Goods that were not on the shelves in the second period were discarded and hence never contributed price comparisons. The discarded goods were disproportionately goods which were being obsoleted and had falling prices. Pakes (2003) provided an analytic framework for analyzing this selection effect and showed both that it could be partially corrected using a particular hedonic technique and that the correction for his personal computer example was substantial. The BLS staff has recently increased the rate at which they incorporate techniques to correct for selection effects in their component indexes. However recent work shows very little difference between hedonic and matched model indices for non computer components of the CPI. This paper explores why. We look carefully at the data on the component index for TVs and show that differences between the TV and computer markets imply that to obtain an effective selection correction we need to use a more general hedonic procedure than has been used to date. The computer market is special in having well defined cardinal measures of the major product characteristics. In markets where such measures are absent we may need to allow for selection on unmeasured, as well as measured, characteristics. We develop a hedonic selection correction that accounts for unmeasured characteristics, apply it to TVs, and show that it yields a much larger selection correction than the standard hedonic. In particular we find that matched model techniques underestimate the rate of price decline by over 20%.
Handle: RePEc:nbr:nberwo:14368
Template-Type: ReDIF-Paper 1.0
Title: Housing Externalities
Classification-JEL: D62; H23; R21; R31
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Author-Name: Pierre-Daniel Sarte
Author-Person: psa30
Author-Name: Raymond Owens III
Author-Person: pow21
Note: EFG PE
Number: 14369
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14369
File-URL: http://www.nber.org/papers/w14369.pdf
File-Format: application/pdf
Publication-Status: published as Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Raymond Owens, 2010. "Housing Externalities," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 485-535, 06.
Abstract: Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, VA, between 1999 and 2004, we study residential externalities. Specifically, we provide evidence that in neighborhoods targeted by the programs, sites that did not directly benefit from capital improvements nevertheless experienced considerable increases in land value relative to similar sites in a control neighborhood. Within the targeted neighborhoods, increases in land value are consistent with externalities that fall exponentially with distance. In particular, we estimate that housing externalities decrease by half approximately every 990 feet. On average, land prices in neighborhoods targeted for revitalization rose by 2 to 5 percent at an annual rate above those in the control neighborhood. These increases translate into land value gains of between $2 and $6 per dollar invested in the program over a six-year period. We provide a simple theory that helps us interpret and estimate these effects.
Handle: RePEc:nbr:nberwo:14369
Template-Type: ReDIF-Paper 1.0
Title: Real Wage Inequality
Classification-JEL: J01; J2; J31; R00
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: LS
Number: 14370
Creation-Date: 2008-09
Order-URL: http://www.nber.org/papers/w14370
File-URL: http://www.nber.org/papers/w14370.pdf
File-Format: application/pdf
Publication-Status: published as Enrico Moretti, 2013. "Real Wage Inequality," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 65-103, January.
Abstract: A large literature has documented a significant increase in the difference between the wage of college graduates and high school graduates over the past 30 years. I show that from 1980 to 2000, college graduates have experienced relatively larger increases in cost of living, because they have increasingly concentrated in metropolitan areas that are characterized by a high cost of housing. When I deflate nominal wages using a location-specific CPI, I find that the difference between the wage of college graduates and high school graduates is lower in real terms than in nominal terms and has grown less. At least 22% of the documented increase in college premium is accounted for by spatial differences in the cost of living. The implications of this finding for changes in well-being inequality depend on why college graduates sort into expensive cities. Using a simple general equilibrium model of the labor and housing markets, I consider two alternative explanations. First, it is possible that the relative supply of college graduates increases in expensive cities because college graduates are increasingly attracted by amenities located in those cities. In this case, the higher cost of housing reflects consumption of desirable local amenities, and there may still be a significant increase in well-being inequality even if the increase in real wage inequality is limited. Alternatively, it is possible that the relative demand for college graduates increases in expensive cities due to shifts in the relative productivity of skilled labor. In this case, the relative increase in skilled workers' standard of living is offset by the higher cost of living. The evidence indicates that changes in the geographical location of different skill groups are mostly driven by changes in their relative demand. I conclude that the increase in well-being disparities between 1980 and 2000 is smaller than the increase in nominal wage disparities that has been the focus of the previous literature.
Handle: RePEc:nbr:nberwo:14370
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Gun Shows on Gun-Related Deaths: Evidence from California and Texas
Classification-JEL: H0; I1; K4
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Randi Hjalmarsson
Author-Person: phj5
Author-Name: Brian A. Jacob
Note: EH LE PE
Number: 14371
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14371
File-URL: http://www.nber.org/papers/w14371.pdf
File-Format: application/pdf
Publication-Status: published as Mark Duggan, Randi Hjalmarsson, Brian Jacob (2011), The Short-Term and Localized Effect of Gun Shows: Evidence from California and Texas, Review of Economics and Statistics, 786-799, Volume 93, Number 3.
Abstract: Thousands of gun shows take place in the U.S. each year. Gun control advocates argue that because sales at gun shows are much less regulated than other sales, such shows make it easier for potential criminals to obtain a gun. Similarly, one might be concerned that gun shows would exacerbate suicide rates by providing individuals considering suicide with a more lethal means of ending their lives. On the other hand, proponents argue that gun shows are innocuous since potential criminals can acquire guns quite easily through other black market sales or theft. In this paper, we use data from Gun and Knife Show Calendar combined with vital statistics data to examine the effect of gun shows. We find no evidence that gun shows lead to substantial increases in either gun homicides or suicides. In addition, tighter regulation of gun shows does not appear to reduce the number of firearms-related deaths.
Handle: RePEc:nbr:nberwo:14371
Template-Type: ReDIF-Paper 1.0
Title: Country Portfolios in Open Economy Macro Models
Classification-JEL: F3; F41
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Alan Sutherland
Author-Person: psu35
Note: IFM
Number: 14372
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14372
File-URL: http://www.nber.org/papers/w14372.pdf
File-Format: application/pdf
Publication-Status: published as Michael B. Devereux & Alan Sutherland, 2011. "Country Portfolios In Open Economy Macro‐Models," Journal of the European Economic Association, John Wiley & Sons, Ltd., vol. 9(2), pages 337-369, 04.
Abstract: This paper develops a simple approximation method for computing equilibrium portfolios in dynamic general equilibrium open economy macro models. The method is widely applicable, simple to implement, and gives analytical solutions for equilibrium portfolio positions in any combination or types of asset. It can be used in models with any number of assets, whether markets are complete or incomplete, and can be applied to stochastic dynamic general equilibrium models of any dimension, so long as the model is amenable to a solution using standard approximation methods. We first illustrate the approach using a simple two-asset endowment economy model, and then show how the results extend to the case of any number of assets and general economic structure.
Handle: RePEc:nbr:nberwo:14372
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Place-Making Policies
Classification-JEL: D0; H0; R0
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Joshua D. Gottlieb
Note: PE
Number: 14373
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14373
File-URL: http://www.nber.org/papers/w14373.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
Abstract: Should the national government undertake policies aimed at strengthening the economies of particular localities or regions? Agglomeration economies and human capital spillovers suggest that such policies could enhance welfare. However, the mere existence of agglomeration externalities does not indicate which places should be subsidized. Without a better understanding of nonlinearities in these externalities, any government spatial policy is as likely to reduce as to increase welfare. Transportation spending has historically done much to make or break particular places, but current transportation spending subsidizes low-income, low-density places where agglomeration effects are likely to be weakest. Most large-scale place-oriented policies have had little discernable impact. Some targeted policies such as Empowerment Zones seem to have an effect but are expensive relative to their achievements. The greatest promise for a national place-based policy lies in impeding the tendency of highly productive areas to restrict their own growth through restrictions on land use.
Handle: RePEc:nbr:nberwo:14373
Template-Type: ReDIF-Paper 1.0
Title: Social Capital and Urban Growth
Classification-JEL: D0; H0; I0; J0; R0
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Charles Redlick
Note: PE
Number: 14374
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14374
File-URL: http://www.nber.org/papers/w14374.pdf
File-Format: application/pdf
Publication-Status: Published online before print June 12, 2009, doi: 10.1177/0160017609336079 International Regional Science Review July 2009 vol. 32 no. 3 264-299
Abstract: Social capital is often place-specific while schooling is portable, so the prospect of migration may reduce the returns to social capital and increase the returns to schooling. If social capital matters for urban success, it is possible that an area can get caught in a bad equilibrium where the prospect of out-migration reduces social capital investment and a lack of social capital investment makes out-migration more appealing. We present a simple model of that process and then test its implications. We find little evidence to suggest that social capital is correlated with either area growth or rates of out-migration. We do, however, find significant differences in the returns to human capital across space, and a significant pattern of skilled people disproportionately leaving declining areas. For people in declining areas, the prospect of out-migration may increase the returns to investment in human capital, but it does not seem to impact investment in social capital.
Handle: RePEc:nbr:nberwo:14374
Template-Type: ReDIF-Paper 1.0
Title: Designing A Carbon Tax to Reduce U.S. Greenhouse Gas Emissions
Classification-JEL: H23; Q54
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 14375
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14375
File-URL: http://www.nber.org/papers/w14375.pdf
File-Format: application/pdf
Publication-Status: published as Gilbert E. Metcalf, 2009. "Designing a Carbon Tax to Reduce U.S. Greenhouse Gas Emissions," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 3(1), pages 63-83, Winter.
Abstract: This article describes a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The credit is linked to earned income and helps offset the regressivity of the carbon tax. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget. The article provides a distributional analysis of the proposal and also makes a number of political, economic and administrative arguments in favor of a carbon tax and responds to the arguments that have commonly been made against using a tax-based approach to reducing U.S. emissions.
Handle: RePEc:nbr:nberwo:14375
Template-Type: ReDIF-Paper 1.0
Title: Efficiency bounds for missing data models with semiparametric restrictions
Classification-JEL: C1; C14; C21
Author-Name: Bryan S. Graham
Author-Person: pgr95
Note: TWP
Number: 14376
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14376
File-URL: http://www.nber.org/papers/w14376.pdf
File-Format: application/pdf
Publication-Status: published as Bryan S. Graham, 2011. "Efficiency Bounds for Missing Data Models With Semiparametric Restrictions," Econometrica, Econometric Society, vol. 79(2), pages 437-452, 03.
Abstract: This paper shows that the semiparametric efficiency bound for a parameter identified by an unconditional moment restriction with data missing at random (MAR) coincides with that of a particular augmented moment condition problem. The augmented system consists of the inverse probability weighted (IPW) original moment restriction and an additional conditional moment restriction which exhausts all other implications of the MAR assumption. The paper also investigates the value of additional semiparametric restrictions on the conditional expectation function (CEF) of the original moment function given always- observed covariates. In the program evaluation context, for example, such restrictions are implied by semiparametric models for the potential outcome CEFs given baseline covariates. The efficiency bound associated with this model is shown to also coincide with that of a particular moment condition problem. Some implications of these results for estimation are briefly discussed.
Handle: RePEc:nbr:nberwo:14376
Template-Type: ReDIF-Paper 1.0
Title: Historical Political Futures Markets: An International Perspective
Classification-JEL: G10; N12; N14; P16
Author-Name: Paul W. Rhode
Author-Person: prh14
Author-Name: Koleman Strumpf
Note: DAE
Number: 14377
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14377
File-URL: http://www.nber.org/papers/w14377.pdf
File-Format: application/pdf
Abstract: Political future markets, in which investors bet on election outcomes, are often thought a recent invention. Such markets in fact have a long history in many Western countries. This paper traces the operation of political futures markets back to 16th Century Italy, 18th Century Britain, and 19th Century United States. In the United States, election betting was a common part of political campaigns in the antebellum period, but became increasingly concentrated in the organized futures markets in New York City over the postbellum period.
Handle: RePEc:nbr:nberwo:14377
Template-Type: ReDIF-Paper 1.0
Title: Competitive Lending with Partial Knowledge of Loan Repayment
Classification-JEL: E43; G11; G18; H81
Author-Name: William A. Brock
Author-Person: pbr142
Author-Name: Charles F. Manski
Author-Person: pma111
Note: AP ME PE
Number: 14378
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14378
File-URL: http://www.nber.org/papers/w14378.pdf
File-Format: application/pdf
Publication-Status: published as Competitive Lending with Partial Knowledge of Loan Repayment: Some Positive and Normative Analysis WILLIAM A. BROCK1, CHARLES F. MANSKI2 Article first published online: 21 MAR 2011 DOI: 10.1111/j.1538-4616.2010.00380.x © 2011 The Ohio State University Issue Journal of Money, Credit and Banking Journal of Money, Credit and Banking Volume 43, Issue 2-3, pages 441–459, March-April 2011
Abstract: We study a competitive credit market in which lenders with partial knowledge of loan repayment use one of three decision criteria - maximization of expected utility, maximin, or minimax regret - to make lending decisions. Lenders allocate endowments between loans and a safe asset, while borrowers demand loans to undertake investments. Borrowers may incompletely repay their loans when investment productivity turns out to be low ex post. We characterize market equilibrium, the contracted repayment rate being the price variable that equilibrates loan supply and demand. Supposing that a public Authority wants to maximize the net social return to borrowing, we study two interventions in the credit market to achieve this objective. One intervention manipulates the return on the safe asset and the other guarantees a minimum loan return to lenders. In a simple scenario, we find that manipulation of the return on the safe asset can be an effective way to achieve the socially desired outcome if lender beliefs about the return to lending are not too pessimistic relative to the beliefs of the Authority. Contrariwise, guaranteeing a minimum loan return can be effective if lender beliefs are not too optimistic relative to the beliefs of the Authority.
Handle: RePEc:nbr:nberwo:14378
Template-Type: ReDIF-Paper 1.0
Title: Inflation-Output Tradeoff as Equilibrium Outcome of Globalization
Classification-JEL: E3; E4; E5; F37; F4; F41
Author-Name: Alon Binyamini
Author-Name: Assaf Razin
Author-Person: pra388
Note: IFM
Number: 14379
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14379
File-URL: http://www.nber.org/papers/w14379.pdf
File-Format: application/pdf
Publication-Status: published as Alon Binyamini & Assaf Razin, 2008. "Inflation-Output Tradeoff As Equilibrium Outcome of Globalization," Israel Economic Review, Bank of Israel, vol. 6(1), pages 109-134.
Abstract: The paper provides an integrated analysis of globalization effects on the inflation-output tradeoff and monetary policy in the New-Keynesian framework. The prediction of the analysis is threefold. First, labor, goods, and capital mobility flatten the Phillips curve, the tradeoff between inflation and activity. Second, the same globalization forces lead the welfare-based monetary policy to be more aggressive with regard to inflation fluctuations, and at the same time, more benign with respect to the output-gap fluctuations. Third, the equilibrium response of inflation to supply and demand shocks is more moderate, and the response of the output gap to these shocks is more pronounced, when the economy opens up; under such welfare-based monetary policy.
Handle: RePEc:nbr:nberwo:14379
Template-Type: ReDIF-Paper 1.0
Title: What Are the Driving Forces of International Business Cycles?
Classification-JEL: E3; E32; F4; F41
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: M. Ayhan Kose
Author-Person: pko65
Author-Name: Christopher Otrok
Author-Person: pot2
Note: IFM
Number: 14380
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14380
File-URL: http://www.nber.org/papers/w14380.pdf
File-Format: application/pdf
Publication-Status: published as Mario Crucini & Ayhan Kose & Christopher Otrok. "What are the driving forces of international business cycles?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics. Volume 14, Issue 1. (January 2011)
Abstract: We examine the driving forces of G-7 business cycles. We decompose national business cycles into common and nation-specific components using a dynamic factor model. We also do this for driving variables found in business cycle models: productivity; measures of fiscal and monetary policy; the terms of trade and oil prices. We find a large common factor in oil prices, productivity, and the terms of trade. Productivity is the main driving force, with other drivers isolated to particular nations or sub-periods. Along these lines, we document shifts in the correlation of the G-7 component of each driver with the overall G-7 cycle.
Handle: RePEc:nbr:nberwo:14380
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Persistence and Volatility of Good-Level Real Exchange Rates: The Role of Sticky Information
Classification-JEL: D40; E31; F31
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Mototsugu Shintani
Author-Person: psh5
Author-Name: Takayuki Tsuruga
Author-Person: pts33
Note: IFM
Number: 14381
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14381
File-URL: http://www.nber.org/papers/w14381.pdf
File-Format: application/pdf
Publication-Status: published as Crucini, Mario J. & Shintani, Mototsugu & Tsuruga, Takayuki, 2010. "Accounting for persistence and volatility of good-level real exchange rates: The role of sticky information," Journal of International Economics, Elsevier, vol. 81(1), pages 48-60, May.
Abstract: Volatile and persistent real exchange rates are observed not only in aggregate series but also in the individual good level data. Kehoe and Midrigan (2007) recently showed that, under a standard assumption on nominal price stickiness, empirical frequencies of micro price adjustment cannot replicate the time-series properties of the law-of-one-price deviations. We extend their sticky price model by combining good specific price adjustment with information stickiness in the sense of Mankiw and Reis (2002). Under a reasonable assumption on the money growth process, we show that the model fully explains both persistence and volatility of the good-level real exchange rates. Furthermore, our framework allows for multiple cities within a country. Using a panel of U.S.-Canadian city pairs, we estimate a dynamic price adjustment process for each 165 individual goods. The empirical result suggests that the dispersion of average time of information update across goods is comparable to that of average time of price adjustment.
Handle: RePEc:nbr:nberwo:14381
Template-Type: ReDIF-Paper 1.0
Title: Estimating Matching Games with Transfers
Classification-JEL: C1; C14; C71; D85; L22; L62
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Note: IO
Number: 14382
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14382
File-URL: http://www.nber.org/papers/w14382.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy T. Fox, 2018. "Estimating matching games with transfers," Quantitative Economics, vol 9(1), pages 1-38.
Abstract: I explore the estimation of transferable utility matching games, encompassing many-to-many matching, marriage and matching with trading networks (trades). I introduce a matching maximum score estimator that does not suffer from a computational curse of dimensionality in the number of agents in a matching market. I apply the estimator to data on the car parts supplied by automotive suppliers to estimate the returns from different portfolios of parts to suppliers and automotive assemblers.
Handle: RePEc:nbr:nberwo:14382
Template-Type: ReDIF-Paper 1.0
Title: Monopoly Power and Endogenous Product Variety: Distortions and Remedies
Classification-JEL: D42; H32; L16
Author-Name: Florin O. Bilbiie
Author-Person: pbi78
Author-Name: Fabio Ghironi
Author-Person: pgh2
Author-Name: Marc J. Melitz
Author-Person: pme260
Note: EFG
Number: 14383
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14383
File-URL: http://www.nber.org/papers/w14383.pdf
File-Format: application/pdf
Publication-Status: published as Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2019. "Monopoly Power and Endogenous Product Variety: Distortions and Remedies," American Economic Journal: Macroeconomics, vol 11(4), pages 140-174.
Abstract: The inefficiencies related to endogenous product creation and variety under monopolistic competition are two-fold: one static—the misalignment between consumers and producers regarding the value of a new variety; and one dynamic—time variation in markups. Quantitatively, the welfare costs of the former are potentially very large relative to the latter. For a calibrated version of our model with these distortions, their total cost amounts to 2 percent of consumption. Appropriate taxation schemes can implement the optimum amount of entry and variety. Elastic labor introduces a further distortion that should be corrected by subsidizing labor at a rate equal to the markup for goods, in order to preserve profit margins and hence entry incentives.
Handle: RePEc:nbr:nberwo:14383
Template-Type: ReDIF-Paper 1.0
Title: Sequencing of Reforms, Financial Globalization, and Macroeconomic Vulnerability
Classification-JEL: F30; F31; F32; F4
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM
Number: 14384
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14384
File-URL: http://www.nber.org/papers/w14384.pdf
File-Format: application/pdf
Publication-Status: published as Edwards, Sebastian, 2009. "Sequencing of reforms, financial globalization, and macroeconomic vulnerability," Journal of the Japanese and International Economies, Elsevier, vol. 23(2), pages 131-148, June.
Publication-Status: published as Sequencing of Reforms, Financial Globalization, and Macroeconomic Vulnerability, Sebastian Edwards. in Financial Globalization, 20th Anniversary Conference, NBER-TCER-CEPR, Hoshi and Ito. 2009
Abstract: I use a large cross country data set and panel probit analysis to investigate the way in which the interaction between trade and financial openness affect the probability of external crises. This analysis is related to debate on the adequate sequencing of reform. I also investigate the role played by current account and fiscal imbalances, contagion, international reserves holdings, and the exchange rate regime as possible determinants of external crises. The results indicate that relaxing capital controls increases the likelihood of a country experiencing a sudden stop. Moreover, the results suggest that "financial liberalization first" strategies increase the degree of vulnerability to external crises. This is particularly the case if this strategy is pursued with pegged exchange rates and if it results in large current account imbalances.
Handle: RePEc:nbr:nberwo:14384
Template-Type: ReDIF-Paper 1.0
Title: When The Saints Come Marching In: Effects of Hurricanes Katrina and Rita on Student Evacuees
Classification-JEL: I2; J01; J24
Author-Name: Bruce Sacerdote
Note: CH ED LS
Number: 14385
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14385
File-URL: http://www.nber.org/papers/w14385.pdf
File-Format: application/pdf
Publication-Status: published as Sacerdote, Bruce. 2012. "When the Saints Go Marching Out: Long-Term Outcomes for Student Evacuees from Hurricanes Katrina and Rita." American Economic Journal: Applied Economics, 4(1): 109-35. DOI: 10.1257/app.4.1.109
Abstract: I examine academic performance and college going for public school students affected by Hurricanes Katrina and Rita. Students who are forced to switch schools due to the hurricanes experience sharp declines in test scores in the first year following the hurricane. However, by the second and third years after the disaster, Katrina evacuees displaced from Orleans Parish appear to benefit from the displacement, experiencing a .15 standard deviation improvement in scores. The test score gains are concentrated among students whose initial schools were in the lowest quintile of the test score distribution and among students who leave the New Orleans MSA. Katrina evacuees from suburban areas and Rita evacuees (from the Lake Charles area) eventually recover most of the ground lost during 05-06 but do not experience long term gains relative to their pre-Katrina test scores. High school age Orleans evacuees have higher college enrollment rates than their predecessors from the same high schools. Meanwhile, Katrina evacuees from the suburbs experience a 3.5 percentage point drop in their rate of enrollment in four year colleges. Those evacuees do not to make up for the decline in the subsequent two years. Later cohorts of suburban New Orleans evacuees are unaffected. The results suggest that for students in the lowest performing schools, the long term gains to achievement from switching schools can more than offset even substantial costs of disruption.
Handle: RePEc:nbr:nberwo:14385
Template-Type: ReDIF-Paper 1.0
Title: Can Time-Varying Risk of Rare Disasters Explain Aggregate Stock Market Volatility?
Classification-JEL: G12
Author-Name: Jessica Wachter
Author-Person: pwa346
Note: AP EFG
Number: 14386
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14386
File-URL: http://www.nber.org/papers/w14386.pdf
File-Format: application/pdf
Publication-Status: published as Jessica A. Wachter, 2013. "Can Time-Varying Risk of Rare Disasters Explain Aggregate Stock Market Volatility?," Journal of Finance, American Finance Association, vol. 68(3), pages 987-1035, 06.
Abstract: Why is the equity premium so high, and why are stocks so volatile? Why are stock returns in excess of government bill rates predictable? This paper proposes an answer to these questions based on a time-varying probability of a consumption disaster. In the model, aggregate consumption follows a normal distribution with low volatility most of the time, but with some probability of a consumption realization far out in the left tail. The possibility of this poor outcome substantially increases the equity premium, while time-variation in the probability of this outcome drives high stock market volatility and excess return predictability.
Handle: RePEc:nbr:nberwo:14386
Template-Type: ReDIF-Paper 1.0
Title: Gender, Source Country Characteristics and Labor Market Assimilation Among Immigrants: 1980-2000
Classification-JEL: J16; J22; J24; J61
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Lawrence M. Kahn
Author-Person: pka63
Author-Name: Kerry L. Papps
Author-Person: ppa41
Note: LS
Number: 14387
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14387
File-URL: http://www.nber.org/papers/w14387.pdf
File-Format: application/pdf
Publication-Status: published as Blau, Kahn, and Papps, “Gender, Source Country Characteristics, and Labor Market Assimilation among Immigrants,“ The Review of Economics and Statistics vol 93, No. 1 (Feb 2011): 43-58
Abstract: We use 1980, 1990 and 2000 Census data to study the impact of source country characteristics on the labor supply assimilation profiles of married adult immigrant women and men. Women migrating from countries where women have high relative labor force participation rates work substantially more than women coming from countries with lower relative female labor supply rates, and this gap is roughly constant with time in the United States. These differences are substantial and hold up even when we control for wage offers and family formation decisions, as well as when we control for the emigration rate from the United States to the source country. Men's labor supply assimilation profiles are unaffected by source country female labor supply, a result that suggests that the female findings reflect notions of gender roles rather than overall work orientation. Findings for another indicator of traditional gender roles, source country fertility rates, are broadly similar, with substantial and persistent negative effects of source country fertility on the labor supply of female immigrants except when we control for presence of children, in which case the negative effects only become evident after ten years in the United States.
Handle: RePEc:nbr:nberwo:14387
Template-Type: ReDIF-Paper 1.0
Title: The Transmission of Women's Fertility, Human Capital and Work Orientation Across Immigrant Generations
Classification-JEL: J1; J16; J22; J24; J61
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Lawrence M. Kahn
Author-Person: pka63
Author-Name: Albert Yung-Hsu Liu
Author-Person: pli226
Author-Name: Kerry L. Papps
Author-Person: ppa41
Note: LS
Number: 14388
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14388
File-URL: http://www.nber.org/papers/w14388.pdf
File-Format: application/pdf
Publication-Status: published as Francine Blau & Lawrence Kahn & Albert Liu & Kerry Papps, 2013. "The transmission of womenâs fertility, human capital, and work orientation across immigrant generations," Journal of Population Economics, Springer, vol. 26(2), pages 405-435, April.
Abstract: Using 1995-2011 Current Population Survey and 1970-2000 Census data, we find that the fertility, education and labor supply of second generation women (US-born women with at least one foreign-born parent) are significantly positively affected by the immigrant generation's levels of these variables, with the effect of the fertility and labor supply of women from the mother's source country generally larger than that of women from the father's source country and the effect of the education of men from the father's source country larger than that of women from the mother's source country. We present some evidence that suggests our findings for fertility and labor supply are due to at least in part to intergenerational transmission of gender roles. Transmission rates for immigrant fertility and labor supply between generations are higher than for education, but there is considerable intergenerational assimilation toward native levels for all three of these outcomes.
Handle: RePEc:nbr:nberwo:14388
Template-Type: ReDIF-Paper 1.0
Title: Sectoral vs. Aggregate Shocks: A Structural Factor Analysis of Industrial Production
Classification-JEL: C32; E23; E32
Author-Name: Andrew T. Foerster
Author-Person: pfo181
Author-Name: Pierre-Daniel G. Sarte
Author-Person: psa30
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 14389
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14389
File-URL: http://www.nber.org/papers/w14389.pdf
File-Format: application/pdf
Publication-Status: published as Sectoral vs. Aggregregate Shocks: A Structural Factor Analysis of Industrial Production (with Andrew Foerster and Pierre-Danieal Sarte) Journal of Political Economy, Vol. 119, No. 1 (February 2011), pp 1-38
Abstract: This paper uses factor analytic methods to decompose industrial production (IP) into components arising from aggregate shocks and idiosyncratic sector-specific shocks. An approximate factor model finds that nearly all (90%) of the variability of quarterly growth rates in IP are associated with common factors. Because common factors may reflect sectoral shocks that have propagated by way of input-output linkages, we then use a multisector growth model to adjust for the effects of these linkages. In particular, we show that neoclassical multisector models, of the type first introduced by Long and Plosser (1983), produce an approximate factor model as a reduced form. A structural factor analysis then indicates that aggregate shocks continue to be the dominant source of variation in IP, but the importance of sectoral shocks more than doubles after the Great Moderation (to 30%). The increase in the relative importance of these shocks follows from a fall in the contribution of aggregate shocks to IP movements after 1984.
Handle: RePEc:nbr:nberwo:14389
Template-Type: ReDIF-Paper 1.0
Title: International Capital Flows under Dispersed Information: Theory and Evidence
Classification-JEL: F32; F36; F41
Author-Name: Cédric Tille
Author-Person: pti5
Author-Name: Eric van Wincoop
Author-Person: pva387
Note: AP IFM
Number: 14390
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14390
File-URL: http://www.nber.org/papers/w14390.pdf
File-Format: application/pdf
Abstract: We develop a new theory of international capital flows based on dispersed information across individual investors. There is extensive evidence of information heterogeneity within and across countries, which has proven critical to understanding asset price behavior. We introduce information dispersion into an open economy dynamic general equilibrium portfolio choice model, and emphasize two implications for capital flows that are specific to the presence of dispersed information. First, gross and net capital flows become partially disconnected from publicly observed fundamentals. Second, capital flows (particularly gross flows) contain information about future fundamentals, even after controlling for current fundamentals. We find that these implications are quantitatively significant and consistent with data for industrialized countries.
Handle: RePEc:nbr:nberwo:14390
Template-Type: ReDIF-Paper 1.0
Title: Stabilizing Expectations under Monetary and Fiscal Policy Coordination
Classification-JEL: E52; E62
Author-Name: Stefano Eusepi
Author-Person: peu2
Author-Name: Bruce Preston
Author-Person: ppr134
Note: EFG ME
Number: 14391
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14391
File-URL: http://www.nber.org/papers/w14391.pdf
File-Format: application/pdf
Abstract: This paper analyzes the constraints imposed on monetary and fiscal policy design by expectations formation. Households and firms learn about the policy regime using historical data. Regime uncertainty substantially narrows, relative to a rational expectations analysis of the model, the menu of policies consistent with expectations stabilization. There is greater need for policy coordination: the specific choice of monetary policy limits the set of fiscal policies consistent with macroeconomic stability --- and simple Taylor-type rules frequently lead to expectations-driven instability. In contrast, non-Ricardian fiscal policies combined with an interest rate peg promote stability. Resolving uncertainty about the prevailing monetary policy regime improves stabilization policy, enlarging the menu of policy options consistent with stability. However, there are limits to the benefits of communicating the monetary policy regime: the more heavily indebted the economy, the greater is the likelihood of expectations-driven instability. More generally, regardless of agents' knowledge of the policy regime, even when expectations are anchored in the long term, short-term dynamics display greater volatility than under rational expectations.
Handle: RePEc:nbr:nberwo:14391
Template-Type: ReDIF-Paper 1.0
Title: Temporary Price Changes and the Real Effects of Monetary Policy
Classification-JEL: E12; E5; E58
Author-Name: Patrick J. Kehoe
Author-Person: pke4
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: EFG
Number: 14392
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14392
File-URL: http://www.nber.org/papers/w14392.pdf
File-Format: application/pdf
Abstract: In the data, prices change both temporarily and permanently. Standard Calvo models focus on permanent price changes and take one of two shortcuts when confronted with the data: drop temporary changes from the data or leave them in and treat them as permanent. We provide a menu cost model that includes motives for both types of price changes. Since this model accounts for the main regularities of price changes, its predictions for the real effects of monetary policy shocks are useful benchmarks against which to judge existing shortcuts. We find that neither shortcut comes close to these benchmarks. For monetary policy analysis, researchers should use a menu cost model like ours or at least a third, theory-based shortcut: set the Calvo model's parameters so that it generates the same real effects from monetary shocks as does the benchmark menu cost model. Following either suggestion will improve monetary policy analysis.
Handle: RePEc:nbr:nberwo:14392
Template-Type: ReDIF-Paper 1.0
Title: Estate Acts, 1600 to 1830: A New Source for British History
Classification-JEL: K0; K11; N13; N43; P14; P16; P26
Author-Name: Dan Bogart
Author-Person: pbo326
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE LE POL
Number: 14393
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14393
File-URL: http://www.nber.org/papers/w14393.pdf
File-Format: application/pdf
Publication-Status: published as Dan Bogart, Gary Richardson (2010), Estate acts, 1600–1830: A new source for British history, in Alexander J. Field (ed.) Research in Economic History (Research in Economic History, Volume 27), Emerald Group Publishing Limited, pp.1-50
Abstract: A new database demonstrates that between 1600 and 1830, Parliament passed thousands of acts restructuring rights to real and equitable estates. These estate acts enabled individuals and families to sell, mortgage, lease, exchange, and improve land previously bound by landholding and inheritance laws. This essay provides a factual foundation for research on this important topic: the law and economics of property rights during the period preceding the Industrial Revolution. Tables present time-series, cross-sectional, and panel data that should serve as a foundation for empirical analysis. Preliminary analysis indicates ways in which this new evidence may shape our understanding of British economic and social history.
Handle: RePEc:nbr:nberwo:14393
Template-Type: ReDIF-Paper 1.0
Title: Modern Management: Good for the Environment or just Hot Air?
Classification-JEL: L26; L6; M11; M12; Q40; Q41
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Christos Genakos
Author-Person: pge261
Author-Name: Ralf Martin
Author-Person: pma225
Author-Name: Raffaella Sadun
Author-Person: psa385
Note: EEE LS PR
Number: 14394
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14394
File-URL: http://www.nber.org/papers/w14394.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2010. "Modern Management: Good for the Environment or Just Hot Air?," Economic Journal, Royal Economic Society, vol. 120(544), pages 551-572, 05.
Abstract: We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. They use less energy per unit of output, and also in relation to other factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. This negative relationship is robust to a variety of controls for industry, location, technology and other factor inputs. Better managed firms are also significantly more productive. One interpretation of these results is that well managed firms are adopting modern lean manufacturing practices, which allows them to increase productivity by using energy more efficiently. This suggests that improving the management practices of manufacturing firms may help to reduce greenhouse gas emissions.
Handle: RePEc:nbr:nberwo:14394
Template-Type: ReDIF-Paper 1.0
Title: Sudden Stops, Sectoral Reallocations, and the Real Exchange Rate
Classification-JEL: E13; F34; F41
Author-Name: Timothy J. Kehoe
Author-Person: pke16
Author-Name: Kim J. Ruhl
Author-Person: pru22
Note: EFG
Number: 14395
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14395
File-URL: http://www.nber.org/papers/w14395.pdf
File-Format: application/pdf
Publication-Status: published as Kehoe, Timothy J. & Ruhl, Kim J., 2009. "Sudden stops, sectoral reallocations, and the real exchange rate," Journal of Development Economics, Elsevier, vol. 89(2), pages 235-249, July.
Abstract: A sudden stop of capital flows into a developing country tends to be followed by a rapid switch from trade deficits to surpluses, a depreciation of the real exchange rate, and decreases in output and total factor productivity. Substantial reallocation takes place from the nontraded sector to the traded sector. We construct a multisector growth model, calibrate it to the Mexican economy, and use it to analyze Mexico's 1994-95 crisis. When subjected to a sudden stop, the model accounts for the trade balance reversal and the real exchange rate depreciation, but it cannot account for the decreases in GDP and TFP. Extending the model to include labor frictions and variable capital utilization, we still find that it cannot quantitatively account for the dynamics of output and productivity without losing the ability to account for the movements of other variables.
Handle: RePEc:nbr:nberwo:14395
Template-Type: ReDIF-Paper 1.0
Title: Partial Prescriptions For Decisions With Partial Knowledge
Classification-JEL: D81
Author-Name: Charles F. Manski
Author-Person: pma111
Note: PE TWP
Number: 14396
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14396
File-URL: http://www.nber.org/papers/w14396.pdf
File-Format: application/pdf
Abstract: This paper concerns the prescriptive function of decision analysis. I suppose that an agent must choose an action yielding welfare that varies with the state of nature. The agent has a welfare function and beliefs, but he does not know the actual state of nature. It is often argued that such an agent should adhere to consistency axioms which imply that behavior can be represented as maximization of expected utility. However, our agent is not concerned the consistency of his behavior across hypothetical choice sets. He only wants to make a reasonable choice from the choice set that he actually faces. Hence, I reason that prescriptions for decision making should respect actuality. That is, they should promote welfare maximization in the choice problem the agent actually faces. I conclude that any decision rule respecting weak and stochastic dominance should be considered rational. Expected utility maximization respects dominance, but it has no special status from the actualist perspective. Moreover, the basic consistency axiom of transitivity has a clear normative foundation only when actions are ordered by dominance.
Handle: RePEc:nbr:nberwo:14396
Template-Type: ReDIF-Paper 1.0
Title: Taxing Leisure Complements
Classification-JEL: H21; H24
Author-Name: Louis Kaplow
Author-Person: pka44
Note: PE
Number: 14397
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14397
File-URL: http://www.nber.org/papers/w14397.pdf
File-Format: application/pdf
Publication-Status: published as TAXING LEISURE COMPLEMENTS LOUIS KAPLOW† Article first published online: 5 AUG 2010 DOI: 10.1111/j.1465-7295.2009.00230.x © 2009 Western Economic Association International Issue Economic Inquiry Economic Inquiry Volume 48, Issue 4, pages 1065–1071, October 2010
Abstract: Ever since Corlett and Hague (1953), it has been understood that it tends to be optimal on second-best grounds to (relatively) tax complements to leisure and subsidize substitutes because doing so helps to offset the distorting effect of taxation on labor supply. Yet in the context of simultaneous optimization of a nonlinear income tax and commodity taxes, Atkinson and Stiglitz (1976) claim to have demonstrated the opposite, that goods complementary with leisure should "face lower tax rates, whereas substitutes face higher tax rates." Derivations in leading texts on optimal taxation seem to yield opposing conclusions regarding the sign of optimal deviation of commodity taxes from uniformity. It is demonstrated that the optimality of relatively taxing leisure complements is indeed correct, and conflicting results are explained.
Handle: RePEc:nbr:nberwo:14397
Template-Type: ReDIF-Paper 1.0
Title: The Subprime Panic
Classification-JEL: G1; G2
Author-Name: Gary B. Gorton
Author-Person: pgo458
Note: AP CF EFG ME
Number: 14398
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14398
File-URL: http://www.nber.org/papers/w14398.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton, 2009. "The Subprime Panic," European Financial Management, Blackwell Publishing Ltd, vol. 15(1), pages 10-46.
Abstract: Understanding the ongoing credit crisis or panic requires understanding the designs of a number of interlinked securities, special purpose vehicles, and derivatives, all related to subprime mortgages. I describe the relevant securities, derivatives, and vehicles to show: (1) how the chain of interlinked securities was sensitive to house prices; (2) how asymmetric information was created via complexity; (3) how the risk was spread in an opaque way; and (4) how trade in the ABX indices (linked to subprime bonds) allowed information to be aggregated and revealed. These details are at the heart of the origin of the Panic of 2007. The events of the panic are described.
Handle: RePEc:nbr:nberwo:14398
Template-Type: ReDIF-Paper 1.0
Title: Sufficient Statistics for Welfare Analysis: A Bridge Between Structural and Reduced-Form Methods
Classification-JEL: C1; H0; J0; L0
Author-Name: Raj Chetty
Author-Person: pch161
Note: EFG IO LS PE
Number: 14399
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14399
File-URL: http://www.nber.org/papers/w14399.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty, 2009. "Sufficient Statistics for Welfare Analysis: A Bridge Between Structural and Reduced-Form Methods," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 451-488, 05.
Abstract: The debate between "structural" and "reduced-form" approaches has generated substantial controversy in applied economics. This article reviews a recent literature in public economics that combines the advantages of reduced-form strategies -- transparent and credible identification -- with an important advantage of structural models -- the ability to make predictions about counterfactual outcomes and welfare. This recent work has developed formulas for the welfare consequences of various policies that are functions of high-level elasticities rather than deep primitives. These formulas provide theoretical guidance for the measurement of treatment effects using program evaluation methods. I present a general framework that shows how many policy questions can be answered by identifying a small set of sufficient statistics. I use this framework to synthesize the modern literature on taxation, social insurance, and behavioral welfare economics. Finally, I discuss topics in labor economics, industrial organization, and macroeconomics that can be tackled using the sufficient statistic approach.
Handle: RePEc:nbr:nberwo:14399
Template-Type: ReDIF-Paper 1.0
Title: Market Work, Home Work and Taxes: A Cross Country Analysis
Classification-JEL: E60; H20; J22
Author-Name: Richard Rogerson
Author-Person: pro53
Note: EFG
Number: 14400
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14400
File-URL: http://www.nber.org/papers/w14400.pdf
File-Format: application/pdf
Publication-Status: published as Richard Rogerson, 2009. "Market Work, Home Work, and Taxes: A Cross-Country Analysis," Review of International Economics, Blackwell Publishing, vol. 17(3), pages 588-601, 08.
Abstract: This paper uses a simple model of labor supply extended to allow for home production to understand the extent to which differences in taxes can account for differences in time allocations between the US and Europe. Once home production is included, the elasticity of substitution between consumption and leisure is almost irrelevant in determining the response of market hours to higher taxes. But to account for observed differences in leisure and time spent in home production, one requires a large elasticity of substitution between consumption and leisure, and a small elasticity of substituion betwen time and goods in home production.
Handle: RePEc:nbr:nberwo:14400
Template-Type: ReDIF-Paper 1.0
Title: Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan
Classification-JEL: E44; G18; G28; G38
Author-Name: Takeo Hoshi
Author-Person: pho107
Author-Name: Anil K. Kashyap
Author-Person: pka35
Note: CF EFG ME
Number: 14401
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14401
File-URL: http://www.nber.org/papers/w14401.pdf
File-Format: application/pdf
Publication-Status: published as Hoshi, Takeo & Kashyap, Anil K, 2010. "Will the U.S. bank recapitalization succeed? Eight lessons from Japan," Journal of Financial Economics, Elsevier, vol. 97(3), pages 398-417, September.
Abstract: During the financial crisis that started in 2007, the U.S. government has used a variety of tools to try to rehabilitate the U.S. banking industry. Many of those strategies were used also in Japan to combat its banking problems in the 1990s. There are also a surprising number of other similarities between the current U.S. crisis and the recent Japanese crisis. The Japanese policies were only partially successful in recapitalizing the banks until the economy finally started to recover in 2003. From these unsuccessful attempts, we derive eight lessons. In light of these eight lessons, we assess the policies the U.S. has pursued. The U.S. has ignored three of the lessons and it is too early to evaluate the U.S. policies with respect to four of the others. So far the U.S. has avoided Japan's problem of having impaired banks prop up zombie firms.
Handle: RePEc:nbr:nberwo:14401
Template-Type: ReDIF-Paper 1.0
Title: Fixed Costs and Long-Lived Investments
Classification-JEL: E22; E32
Author-Name: Christopher L. House
Author-Person: pho56
Note: EFG ME
Number: 14402
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14402
File-URL: http://www.nber.org/papers/w14402.pdf
File-Format: application/pdf
Publication-Status: published as Christopher L. House, 2014. "Fixed costs and long-lived investments," Journal of Monetary Economics, vol 68, pages 86-100.
Abstract: Neoclassical investment models predict that firms should make frequent, small adjustments to their capital stocks. Microeconomic evidence, however, shows just the opposite -- firms make infrequent, large adjustments to their capital stocks. In response, researchers have developed models with fixed costs of adjustment to explain the data. While these models generate the observed firm-level investment behavior, it is not clear that the aggregate behavior of these models differs importantly from the aggregate behavior of neoclassical models. This is important since most of our existing understanding of investment is based on models without fixed costs. Moreover, models with fixed costs have non-degenerate, time-varying distributions of capital holdings across firms, making the models extremely difficult to analyze. This paper shows that, for sufficiently long-lived capital, (1) the cross-sectional distribution of capital holdings has virtually no bearing on the equilibrium and (2) the aggregate behavior of the fixed-cost model is virtually identical to that of the neoclassical model. The findings are due to a near infinite elasticity of investment timing for long-lived capital goods -- a feature that fixed-cost models and neoclassical models share. The analysis shows that the so-called "irrelevance results" obtained in recent numerical studies of fixed-cost models are not parametric special cases but instead reflect fundamental properties of long-lived investments.
Handle: RePEc:nbr:nberwo:14402
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxation and Social Insurance with Endogenous Private Insurance
Classification-JEL: D6; H0
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: EFG EH PE
Number: 14403
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14403
File-URL: http://www.nber.org/papers/w14403.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & Emmanuel Saez, 2010. "Optimal Taxation and Social Insurance with Endogenous Private Insurance," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 85-114, May.
Publication-Status: published as Optimal Taxation and Social Insurance with Endogenous Private Insurance, Raj Chetty, Emmanuel Saez. in Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), Gordon and Piketty. 2010
Abstract: This paper characterizes the welfare gains from redistributive taxation and social insurance in an environment where the private sector provides partial insurance. We analyze stylized models in which adverse selection, pre-existing information, or imperfect optimization in private insurance markets create a role for government intervention. We derive simple formulas that map reduced-form empirical estimates into quantitative predictions for optimal tax and social insurance policy. Applications to unemployment and health insurance show that taking private market insurance into account matters significantly for optimal benefit levels given existing empirical estimates of the key parameters.
Handle: RePEc:nbr:nberwo:14403
Template-Type: ReDIF-Paper 1.0
Title: Psychiatric Disorders and Labor Market Outcomes: Evidence from the National Comorbidity Survey - Replication
Classification-JEL: I0
Author-Name: Pinka Chatterji
Author-Person: pch732
Author-Name: Margarita Alegria
Author-Name: David Takeuchi
Note: EH
Number: 14404
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14404
File-URL: http://www.nber.org/papers/w14404.pdf
File-Format: application/pdf
Publication-Status: published as Chatterji, Pinka & Alegria, Margarita & Takeuchi, David, 2011. "Psychiatric disorders and labor market outcomes: Evidence from the National Comorbidity Survey-Replication," Journal of Health Economics, Elsevier, vol. 30(5), pages 858-868.
Abstract: This paper uses the National Comorbidity Survey - Replication to estimate the effects of recent psychiatric disorder on employment, hours worked, and earnings. We employ methods proposed in Altonji, Elder and Taber (2005) which use selection on observable traits to provide information regarding selection along unobservable factors. Among males, disorder is associated with reductions of 13-17 percentage points in labor force participation and employment, depending on the sample and the model. Among females, we find smaller, less consistent associations between disorder and labor force participation and employment. There are no effects of disorder on earnings or hours worked among employed individuals.
Handle: RePEc:nbr:nberwo:14404
Template-Type: ReDIF-Paper 1.0
Title: Understanding U.S. Corporate Tax Losses
Classification-JEL: H25
Author-Name: Rosanne Altshuler
Author-Person: pal34
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Michael Cooper
Author-Name: Matthew Knittel
Note: PE
Number: 14405
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14405
File-URL: http://www.nber.org/papers/w14405.pdf
File-Format: application/pdf
Publication-Status: published as Understanding US Corporate Tax Losses, Rosanne Altshuler, Alan J. Auerbach, Michael Cooper, Matthew Knittel. in Tax Policy and the Economy, Volume 23, Brown and Poterba. 2009
Abstract: Recent data present a puzzle: the ratio of corporate tax losses to positive income was much higher around 2001 than in earlier recessions. Using a comprehensive 1982-2005 sample of U.S. corporation tax returns, we explore a variety of potential explanations for this surge in tax losses, taking account of the significant use of executive compensation stock options beginning in the 1990s and recent temporary tax provisions that might have had important effects on taxable income. We find that losses rose because the average rate of return of C corporations fell, rather than because of an increase in the dispersion of returns or an increase in the gap between corporate profits subject to tax and NIPA corporate profits. Our analysis also suggests that the increasing importance of S corporations may help explain the recent experience within the C corporate sector, as S corporations have exhibited a different pattern of losses in recent years. However, we can identify no simple explanation for this differing experience. Our investigation concludes with some new puzzles: why did rates of return of C corporations fall so much early in the decade and why has the incidence of losses among C and S corporations diverged?
Handle: RePEc:nbr:nberwo:14405
Template-Type: ReDIF-Paper 1.0
Title: Free Distribution or Cost-Sharing? Evidence from a Malaria Prevention Experiment
Classification-JEL: C93; D12; H23; H42
Author-Name: Jessica Cohen
Author-Name: Pascaline Dupas
Author-Person: pdu104
Note: CH EH
Number: 14406
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14406
File-URL: http://www.nber.org/papers/w14406.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2010) 125 (1): 1-45. doi: 10.1162/qjec.2010.125.1.1
Abstract: It is often argued that cost-sharing -- charging a subsidized, positive price -- or a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prenatal clinics could sell long lasting anti-malarial insecticide-treated nets (ITNs) to pregnant women. We find no evidence that cost-sharing reduces wastage on those that will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that cost-sharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the average prenatal client in the area in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by 75 percent when the price of ITNs increases from zero to $0.75 (i.e. from 100 to 87.5 percent subsidy), the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of ITN prices on child mortality that incorporates both private and social returns to ITN usage. Overall, our results suggest that free distribution of ITNs could save many more lives than cost-sharing programs have achieved so far, and, given the large positive externality associated with widespread usage of ITNs, it would likely do so at a lesser cost per life saved.
Handle: RePEc:nbr:nberwo:14406
Template-Type: ReDIF-Paper 1.0
Title: Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?
Classification-JEL: J2; L0; L1; L2; L6; O3; R2
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: William R. Kerr
Author-Person: pke127
Note: IO
Number: 14407
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14407
File-URL: http://www.nber.org/papers/w14407.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & William R. Kerr, 2009. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 18(3), pages 623-663, 09.
Abstract: Why are some places more entrepreneurial than others? We use Census Bureau data to study local determinants of manufacturing startups across cities and industries. Demographics have limited explanatory power. Overall levels of local customers and suppliers are only modestly important, but new entrants seem particularly drawn to areas with many smaller suppliers, as suggested by Chinitz (1961). Abundant workers in relevant occupations also strongly predict entry. These forces plus city and industry fixed effects explain between sixty and eighty percent of manufacturing entry. We use spatial distributions of natural cost advantages to address partially endogeneity concerns
Handle: RePEc:nbr:nberwo:14407
Template-Type: ReDIF-Paper 1.0
Title: Experimentation, Patents, and Innovation
Classification-JEL: D83; D92; O31
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Kostas Bimpikis
Author-Name: Asuman Ozdaglar
Note: CF
Number: 14408
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14408
File-URL: http://www.nber.org/papers/w14408.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Kostas Bimpikis & Asuman Ozdaglar, 2011. "Experimentation, Patents, and Innovation," American Economic Journal: Microeconomics, American Economic Association, vol. 3(1), pages 37-77, February.
Abstract: This paper studies a simple model of experimentation and innovation. Our analysis suggests that patents may improve the allocation of resources by encouraging rapid experimentation and efficient ex post transfer of knowledge across firms. Each firm receives a private signal on the success probability of one of many potential research projects and decides when and which project to implement. A successful innovation can be copied by other firms. Symmetric equilibria (where actions do not depend on the identity of the firm) always involve delayed and staggered experimentation, whereas the optimal allocation never involves delays and may involve simultaneous rather than staggered experimentation. The social cost of insufficient experimentation can be arbitrarily large. Appropriately-designed patents can implement the socially optimal allocation (in all equilibria). In contrast to patents, subsidies to experimentation, research, or innovation cannot typically achieve this objective. We also show that when signal quality differs across firms, the equilibrium may involve a nonmonotonicity, whereby players with stronger signals may experiment after those with weaker signals. We show that in this more general environment patents again encourage experimentation and reduce delays.
Handle: RePEc:nbr:nberwo:14408
Template-Type: ReDIF-Paper 1.0
Title: Information Disclosure Policy: Do States' Data Processing Efforts Help More than the Information Disclosure Itself?
Classification-JEL: D80; Q50; Q53; Q58
Author-Name: Hyunhoe Bae
Author-Name: Peter Wilcoxen
Author-Name: David Popp
Note: EEE
Number: 14409
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14409
File-URL: http://www.nber.org/papers/w14409.pdf
File-Format: application/pdf
Publication-Status: published as Hyunhoe Bae & Peter Wilcoxen & David Popp, 2010. "Information disclosure policy: Do state data processing efforts help more than the information disclosure itself?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 163-182.
Abstract: The Toxics Release Inventory (TRI) was expected to reduce health risks stemming from emissions of hazardous chemicals by increasing public pressure on polluters. However, it is a massive and complex dataset, requiring significant expertise to interpret in its raw form. State governments have attempted to mitigate the TRI's information processing burden on the public via two types of policies: (1) selection and dissemination of raw TRI data for plants within the state, and (2) data processing activities producing more refined reports and analysis. This study assesses the effectiveness of those policies. Our results show that state-level data dissemination efforts lowered the total number of pounds of chemicals released, but had little effect on health risks. State-level data processing efforts, in contrast, did lead to significant reductions in health risks. We conclude that simple dissemination of the data was ineffective (and even counterproductive in some instances), and that the states' data processing efforts have played a critical role in achieving the TRI's underlying goal.
Handle: RePEc:nbr:nberwo:14409
Template-Type: ReDIF-Paper 1.0
Title: Railroads and the Rise of the Factory: Evidence for the United States, 1850-70
Classification-JEL: N61; N71
Author-Name: Jeremy Atack
Author-Person: pat28
Author-Name: Michael R. Haines
Author-Person: pha740
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 14410
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14410
File-URL: http://www.nber.org/papers/w14410.pdf
File-Format: application/pdf
Publication-Status: published as “Railroads and the Rise of the Factory: Evidence for the United States, 1850 - 1870,” (with Haines and Margo ) in P a ul Rhode, J oshua Rosenbloom, and D avid Weiman, ( eds. ) Economic Evolution and Revolutions in Historical Time . Palo Alto, CA: Stanford University Press, (2011): 162 - 179 .
Abstract: Over the course of the nineteenth century manufacturing in the United States shifted from artisan shop to factory production. At the same time United States experienced a "transportation revolution", a key component of which was the building of extensive railroad network. Using a newly created data set of manufacturing establishments linked to county level data on rail access from 1850-70, we ask whether the coming of the railroad increased establishment size in manufacturing. Difference-in-difference and instrument variable estimates suggest that the railroad had a positive effect on factory status. In other words, Adam Smith was right -- the division of labor in nineteenth century American manufacturing was limited by the extent of the market.
Handle: RePEc:nbr:nberwo:14410
Template-Type: ReDIF-Paper 1.0
Title: Using Samples of Unequal Length in Generalized Method of Moments Estimation
Classification-JEL: C32; G12
Author-Name: Anthony W. Lynch
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Note: AP TWP
Number: 14411
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14411
File-URL: http://www.nber.org/papers/w14411.pdf
File-Format: application/pdf
Publication-Status: published as Lynch, Anthony W. & Wachter, Jessica A., 2013. "Using Samples of Unequal Length in Generalized Method of Moments Estimation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 48(01), pages 277-307, February.
Abstract: Many applications in financial economics use data series with different starting or ending dates. This paper describes estimation methods, based on the generalized method of moments (GMM), which make use of all available data for each moment condition. We introduce two asymptotically equivalent estimators that are consistent, asymptotically normal, and more efficient asymptotically than standard GMM. We apply these methods to estimating predictive regressions in international data and show that the use of the full sample affects point estimates and standard errors for both assets with data available for the full period and assets with data available for a subset of the period. Monte Carlo experiments demonstrate that reductions hold for small-sample standard errors as well as asymptotic ones.
Handle: RePEc:nbr:nberwo:14411
Template-Type: ReDIF-Paper 1.0
Title: The Limited Partnership in New York, 1822-1853: Partnerships without Kinship
Classification-JEL: K2; N81
Author-Name: Eric Hilt
Author-Person: phi104
Author-Name: Katharine E. O'Banion
Note: DAE LE
Number: 14412
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14412
File-URL: http://www.nber.org/papers/w14412.pdf
File-Format: application/pdf
Publication-Status: published as Hilt, Eric & O'Banion, Katharine, 2009. "The Limited Partnership in New York, 1822?1858: Partnerships Without Kinship," The Journal of Economic History, Cambridge University Press, vol. 69(03), pages 615-645, September.
Abstract: In 1822, New York became the first common-law state to authorize the formation of limited partnerships, and over the ensuing decades, many other states followed. Most prior research has suggested that these statutes were utilized only rarely, but little is known about their effects. Using newly collected data, this paper analyzes the use of the limited partnership in nineteenth-century New York City. We find that the limited partnership form was adopted by a surprising number of firms, and that limited partnerships had more capital, failed at lower rates, and were less likely to be formed on the basis of kinship ties, compared to ordinary partnerships. The latter differences were not simply due to selection: even though the merchants who invested in limited partnerships were a wealthy and successful elite, their own ordinary partnerships were quite different from their limited partnerships. The results suggest that the limited partnership facilitated investments outside kinship networks, and into the hands of talented young merchants.
Handle: RePEc:nbr:nberwo:14412
Template-Type: ReDIF-Paper 1.0
Title: The impact of Medicare Part D on Medicare-Medicaid Dual-eligible Beneficiaries' Prescription Utilization and Expenditures
Classification-JEL: H42; I11; I18
Author-Name: Anirban Basu
Author-Person: pba977
Author-Name: Wesley Yin
Author-Name: G. Caleb Alexander
Author-Person: pal505
Note: EH
Number: 14413
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14413
File-URL: http://www.nber.org/papers/w14413.pdf
File-Format: application/pdf
Publication-Status: published as A Basu & W Yin & GC Alexander, 2009. "PHP26 THE IMPACT OF MEDICARE PART D ON MEDICARE-MEDICAID DUAL-ELIGIBLE BENEFICIARIES' PRESCRIPTION UTILIZATION AND EXPENDITURES," Value in Health, vol 12(3).
Abstract: Features of Part D gave rise to broad concern that the drug benefit would negatively impact prescription utilization among the six million dual eligible beneficiaries, either during the transition from state Medicaid to Part D coverage, or in the long-run. At the same time, Part D contained other features, such as its auto-enrollment and premium subsidization policies, which were designed to safeguard utilization for this vulnerable group. Using national retail pharmacy claims, we examine the experience of dual eligibles during the first 18 months of Part D. We find no evidence that Part D adversely affected pharmaceutical utilization or out-of-pocket expenditures in the transition period, or in the 18 months subsequent to Part D implementation.
Handle: RePEc:nbr:nberwo:14413
Template-Type: ReDIF-Paper 1.0
Title: Estimating Welfare in Insurance Markets Using Variation in Prices
Classification-JEL: C13; C51; D14; D60; D82; I11
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Mark R. Cullen
Note: AG EH IO PE
Number: 14414
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14414
File-URL: http://www.nber.org/papers/w14414.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2010) 125 (3): 877-921. doi: 10.1162/qjec.2010.125.3.877
Abstract: We show how standard consumer and producer theory can be used to estimate welfare in insurance markets with selection. The key observation is that the same price variation needed to identify the demand curve also identifies how costs vary as market participants endogenously respond to price. With estimates of both the demand and cost curves, welfare analysis is straightforward. We illustrate our approach by applying it to the employee health insurance choices at Alcoa, Inc. We detect adverse selection in this setting but estimate that its quantitative welfare implications are small, and not obviously remediable by standard public policy tools.
Handle: RePEc:nbr:nberwo:14414
Template-Type: ReDIF-Paper 1.0
Title: Inside the Black of Box of Ability Peer Effects: Evidence from Variation in the Proportion of Low Achievers in the Classroom
Classification-JEL: I2; I21; J24
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: M. Daniele Paserman
Author-Person: ppa129
Author-Name: Analia Schlosser
Author-Person: psc163
Note: CH ED LS
Number: 14415
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14415
File-URL: http://www.nber.org/papers/w14415.pdf
File-Format: application/pdf
Publication-Status: published as Inside the Black Box of Ability Peer Effects: Evidence from Variation in the Proportion of Low Achievers in the Classroom* Victor Lavy1, M. Daniele Paserman2, Analia Schlosser3 Article first published online: 23 AUG 2011 DOI: 10.1111/j.1468-0297.2011.02463.x © 2011 The Author(s). The Economic Journal © 2011 Royal Economic Society Issue The Economic Journal The Economic Journal Volume 122, Issue 559, pages 208–237, March 2012
Abstract: In this paper, we estimate the extent of ability peer effects in the classroom and explore the underlying mechanisms through which these peer effects operate. We identify as low ability students those who are enrolled at least one year behind their birth cohort ("repeaters"). We show that there are marked differences between the academic performance and behavior of repeaters and regular students. The status of repeaters is mostly determined by first grade; therefore, it is unlikely to have been affected by their classroom peers, and our estimates will not suffer from the reflection problem. Using within school variation in the proportion of these low ability students across cohorts of middle and high school students in Israel, we find that the proportion of low achieving peers has a negative effect on the performance of regular students, especially those located at the lower end of the ability distribution. An exploration of the underlying mechanisms of these peer effects shows that, relative to regular students, repeaters report that teachers are better in the individual treatment of students and in the instilment of capacity for individual study. However, a higher proportion of these low achieving students results in a deterioration of teachers' pedagogical practices, has detrimental effects on the quality of inter-student relationships and the relationships between teachers and students, and increases the level of violence and classroom disruptions.
Handle: RePEc:nbr:nberwo:14415
Template-Type: ReDIF-Paper 1.0
Title: Imported Intermediate Inputs and Domestic Product Growth: Evidence from India
Classification-JEL: F1; F13; F14
Author-Name: Pinelopi K. Goldberg
Author-Person: pgo1
Author-Name: Amit Khandelwal
Author-Person: pkh138
Author-Name: Nina Pavcnik
Author-Person: ppa511
Author-Name: Petia Topalova
Note: ITI
Number: 14416
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14416
File-URL: http://www.nber.org/papers/w14416.pdf
File-Format: application/pdf
Publication-Status: published as Pinelopi Koujianou Goldberg & Amit Kumar Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1727-1767, November.
Abstract: New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from a large developing economy--India--to investigate the relationship between declines in trade costs, the imports of intermediate inputs and domestic firm product scope. We estimate substantial static gains from trade through access to new imported inputs. Accounting for new imported varieties lowers the import price index for intermediate goods on average by an additional 4.7 percent per year relative to conventional gains through lower prices of existing imports. Moreover, we find that lower input tariffs account on average for 31 percent of the new products introduced by domestic firms, which implies potentially large dynamic gains from trade. This expansion in firms' product scope is driven to a large extent by international trade increasing access of firms to new input varieties rather than by simply making existing imported inputs cheaper. Hence, our findings suggest that an important consequence of the input tariff liberalization was to relax technological constraints through firms' access to new imported inputs that were unavailable prior to the liberalization.
Handle: RePEc:nbr:nberwo:14416
Template-Type: ReDIF-Paper 1.0
Title: Future Rent-Seeking and Current Public Savings
Classification-JEL: E6; H2; H6
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Pierre Yared
Author-Person: pya107
Note: PE
Number: 14417
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14417
File-URL: http://www.nber.org/papers/w14417.pdf
File-Format: application/pdf
Publication-Status: published as Caballero, Ricardo J. & Yared, Pierre, 2010. "Future rent-seeking and current public savings," Journal of International Economics, Elsevier, vol. 82(2), pages 124-136, November.
Abstract: The conventional wisdom is that politicians' rent-seeking motives increase public debt and deficits. This is because myopic politicians face political risk and prefer to extract political rents as early as possible. An implication of this argument is that governments will under-save during a boom, leaving the economy unprotected in the event of a downturn. This view motivates a number of fiscal rules which are aimed at cutting deficits and constraining borrowing so as to limit the size of this political distortion. In this paper we study the determination of government debt and deficits in a dynamic model of debt which characterizes political distortions. We find that in our model the conventional wisdom always applies in the long run, but only does so in the short run when economic volatility is low. Instead, when economic volatility is high, a rent-seeking government over-saves and over-taxes along the equilibrium path relative to a benevolent government. Paradoxically, the over-saving bias can also be solved in this case by a rule of capping deficits, although the mechanism operates through its effect on expectations of future rent extraction rather than though the contemporary constraint. However, these rules are ineffective in solving the high taxation problem caused by the political friction, which in the short run is more acute in the high income volatility scenario.
Handle: RePEc:nbr:nberwo:14417
Template-Type: ReDIF-Paper 1.0
Title: The Quality-Complementarity Hypothesis: Theory and Evidence from Colombia
Classification-JEL: F12; L11; O14
Author-Name: Maurice Kugler
Author-Person: pku86
Author-Name: Eric Verhoogen
Author-Person: pve68
Note: ITI
Number: 14418
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14418
File-URL: http://www.nber.org/papers/w14418.pdf
File-Format: application/pdf
Publication-Status: published as Maurice Kugler and Eric Verhoogen, “Prices, Plant Size, and Product Quality.” Review of Economic Studies, vol. 79 no. 1, pp. 307-339, Jan. 2012.
Abstract: This paper presents a tractable formalization and an empirical investigation of the quality-complementarity hypothesis, the hypothesis that input quality and plant productivity are complementary in generating output quality. We embed this complementarity in a general-equilibrium trade model with heterogeneous, monopolistically competitive firms, extending Melitz (2003), and show that it generates distinctive implications for two simple, observable within-sector correlations -- between output prices and plant size and between input prices and plant size -- and for how those correlations vary across sectors. Using uniquely rich and representative data on the unit values of outputs and inputs of Colombian manufacturing plants, we then document three facts: (1) output prices are positively correlated with plant size within industries on average; (2) input prices are positively correlated with plant size within industries on average; and (3) both correlations are more positive in industries with more scope for quality differentiation, as measured by the advertising and R&D intensity of U.S. industries. The predicted and observed correlations between export status and input and output prices are similar to those for plant size. We present additional evidence that market power of either final-good producers or input suppliers does not fully explain the empirical patterns we observe. These findings are consistent with the predictions of our model and difficult to reconcile with alternative models that impose symmetry or homogeneity of either inputs or outputs. We interpret the results as broadly supportive of the quality-complementarity hypothesis.
Handle: RePEc:nbr:nberwo:14418
Template-Type: ReDIF-Paper 1.0
Title: Urban Inequality
Classification-JEL: H0; I0; J0; R0
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Matthew G. Resseger
Author-Name: Kristina Tobio
Note: PE
Number: 14419
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14419
File-URL: http://www.nber.org/papers/w14419.pdf
File-Format: application/pdf
Abstract: What impact does inequality have on metropolitan areas? Crime rates are higher in places with more inequality, and people in unequal cities are more likely to say that they are unhappy. There is also a negative association between local inequality and the growth of both income and population, once we control for the initial distribution of skills. What determines the degree of inequality across metropolitan areas? Twenty years ago, metropolitan inequality was strongly associated with poverty, but today, inequality is more strongly linked to the presence of the wealthy. Inequality in skills can explain about one third of the variation in income inequality, and that skill inequality is itself explained by historical schooling patterns and immigration. There are also substantial differences in the returns to skill, related to local concentrations in different industries, and these too are strongly correlated with inequality.
Handle: RePEc:nbr:nberwo:14419
Template-Type: ReDIF-Paper 1.0
Title: A Faith-based Initiative: Does a Flexible Exchange Rate Regime Really Facilitate Current Account Adjustment?
Classification-JEL: F3
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM
Number: 14420
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14420
File-URL: http://www.nber.org/papers/w14420.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economics and Statistics March 2013, Vol. 95, No. 1, Pages 168-184 Posted Online March 19, 2013. (doi:10.1162/REST_a_00244) © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology A Faith-Based Initiative Meets the Evidence: Does a Flexible Exchange Rate Regime Really Facilitate Current Account Adjustment? Menzie D. Chinn University of Wisconsin, and NBER Shang-Jin Wei Columbia University and NBER
Abstract: The assertion that a flexible exchange rate regime would facilitate current account adjustment is often repeated in policy circles. In this paper, we compile a data set encompassing data for over 170 countries are included, over the 1971-2005 period, and examine whether the rate of current account reversion depends upon the de facto degree of exchange rate fixity, as measured by two popular indices. We find that there is no strong, robust, or monotonic relationship between exchange rate regime flexibility and the rate of current account reversion, even after accounting for the degree of economic development, the degree of trade and capital account openness. We also find that the endogenous selection of exchange rate regimes does not explain the observed lack of correlation.
Handle: RePEc:nbr:nberwo:14420
Template-Type: ReDIF-Paper 1.0
Title: Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage
Classification-JEL: Q48
Author-Name: Meredith Fowlie
Note: EEE
Number: 14421
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14421
File-URL: http://www.nber.org/papers/w14421.pdf
File-Format: application/pdf
Publication-Status: published as Meredith L. Fowlie, 2009. "Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 72-112, August.
Abstract: For political, jurisdictional and technical reasons, environmental regulation of industrial pollution is often incomplete: regulations apply to only a subset of facilities contributing to a pollution problem. Policymakers are increasingly concerned about the emissions leakage that may occur if unregulated production can be easily substituted for production at regulated firms. This paper analyzes emissions leakage in an incompletely regulated and imperfectly competitive industry. When regulated producers are less polluting than their unregulated ounterparts, emissions under incomplete regulation can exceed the level of emissions that would have occurred in the absence of regulation. Converseley, when regulated firms are relatively more polluting, aggregate emissions under complete regulation can exceed aggregate emissions under incomplete regulation. In a straightforward application of the theory of the second best, I show that incomplete regulation can welfare dominate complete regulation of emissions from an asymmetric oligopoly. The model is used to simulate greenhouse gas emissions from California's electricity sector under a source-based cap-and-trade program. Incomplete regulation that exempts out-of-state producers achieves approximately a third of the emissions reductions achieved under complete regulation at more than twice the cost per ton of emissions abated.
Handle: RePEc:nbr:nberwo:14421
Template-Type: ReDIF-Paper 1.0
Title: Can a Lender of Last Resort Stabilize Financial Markets? Lessons from the Founding of the Fed
Classification-JEL: E4; G1; N11; N12
Author-Name: Asaf Bernstein
Author-Name: Eric Hughson
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Note: DAE ME
Number: 14422
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14422
File-URL: http://www.nber.org/papers/w14422.pdf
File-Format: application/pdf
Abstract: We use the founding of the Federal Reserve as a historical experiment to provide some insight into whether a lender of last resort can stabilize financial markets. Following the Panic of 1907, Congress passed two measures that established a lender of last resort in the United States: (1) the Aldrich-Vreeland Act of 1908 which authorized certain banks to issue emergency currency during a financial crisis and (2) the Federal Reserve Act of 1913 which established a central bank. We employ a new identification strategy to isolate the effects of the introduction of a lender of last resort from other macroeconomic shocks. We compare the standard deviation of stock returns and short-term interest rates over time across the months of September and October, the two months of the year when financial markets were most vulnerable to a crash because of financial stringency from the harvest season, with the rest of the year during the period 1870-1925. Stock volatility in the post-1907 period (June 1908-1925) was more than 40 percent lower in the months of September and October compared to the period (1870- May 1908). We also find that the volatility of the call loan rate declined nearly 70 percent in September and October following the monetary regime change.
Handle: RePEc:nbr:nberwo:14422
Template-Type: ReDIF-Paper 1.0
Title: The Changing Incidence of Geography
Classification-JEL: F10; F15; R10
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: ITI
Number: 14423
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14423
File-URL: http://www.nber.org/papers/w14423.pdf
File-Format: application/pdf
Publication-Status: published as James E. Anderson & Yoto V. Yotov, 2010. "The Changing Incidence of Geography," American Economic Review, American Economic Association, vol. 100(5), pages 2157-86, December.
Abstract: The incidence of bilateral trade costs is calculated here using neglected properties of the structural gravity model, disaggregated by commodity and region, and re-aggregated into forms useful for economic geography. For Canada's provinces, 1992- 2003, incidence is on average some five times higher for sellers than for buyers. Sellers' incidence falls over time due to specialization, despite constant gravity coefficients. This previously unrecognized globalizing force drives big reductions in 'constructed home bias', the disproportionate predicted share of local trade; and large but varying gains in real GDP.
Handle: RePEc:nbr:nberwo:14423
Template-Type: ReDIF-Paper 1.0
Title: Fooling Some of the People All of the Time: The Inefficient Performance and Persistence of Commodity Trading Advisors
Classification-JEL: G12; G13
Author-Name: Geetesh Bhardwaj
Author-Person: pbh29
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: K. Geert Rouwenhorst
Author-Person: pro146
Note: AP CF
Number: 14424
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14424
File-URL: http://www.nber.org/papers/w14424.pdf
File-Format: application/pdf
Publication-Status: published as Geetesh Bhardwaj & Gary B. Gorton & K. Geert Rouwenhorst, 2014. "Fooling Some of the People All of the Time: The Inefficient Performance and Persistence of Commodity Trading Advisors," Review of Financial Studies, vol 27(11), pages 3099-3132.
Abstract: Investors face significant barriers in evaluating the performance of hedge funds and commodity trading advisors (CTAs). The only available performance data comes from voluntary reporting to private companies. Funds have incentives to strategically report to these companies, causing these data sets to be severely biased. And, because hedge funds use nonlinear, state-dependent, leveraged strategies, it has proven difficult to determine whether they add value relative to benchmarks. We focus on commodity trading advisors, a subset of hedge funds, and show that during the period 1994-2007 CTA excess returns to investors (i.e., net of fees) averaged 85 basis points per annum over US T-bills, which is insignificantly different from zero. We estimate that CTAs on average earned gross excess returns (i.e., before fees) of 5.4%, which implies that funds captured most of their performance through charging fees. Yet, even before fees we find that CTAs display no alpha relative to simple futures strategies that are in the public domain. We argue that CTAs appear to persist as an asset class despite their poor performance, because they face no market discipline based on credible information. Our evidence suggests that investors' experience of poor performance is not common knowledge.
Handle: RePEc:nbr:nberwo:14424
Template-Type: ReDIF-Paper 1.0
Title: External Economies and International Trade Redux
Classification-JEL: F1; F11
Author-Name: Gene M. Grossman
Author-Person: pgr21
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI
Number: 14425
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14425
File-URL: http://www.nber.org/papers/w14425.pdf
File-Format: application/pdf
Publication-Status: published as Gene M. Grossman & Esteban Rossi-Hansberg, 2010. "External Economies and International Trade Redux," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 829-858, May.
Abstract: We study a world with national external economies of scale at the industry level. In contrast to the standard treatment with perfect competition and two industries, we assume Bertrand competition in a continuum of industries. In this setting, many of the "pathologies" of the standard treatment disappear. There typically exists a unique equilibrium with trade guided by "natural" comparative advantage. And, when a country has CES preferences and any finite elasticity of substitution between goods, gains from trade are assured.
Handle: RePEc:nbr:nberwo:14425
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty, Climate Change and the Global Economy
Classification-JEL: E17; O13; Q54
Author-Name: David von Below
Author-Name: Torsten Persson
Author-Person: ppe28
Note: IFM PE
Number: 14426
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14426
File-URL: http://www.nber.org/papers/w14426.pdf
File-Format: application/pdf
Abstract: The paper illustrates how one may assess our comprehensive uncertainty about the various relations in the entire chain from human activity to climate change. Using a modified version of the RICE model of the global economy and climate, we perform Monte Carlo simulations, where full sets of parameters in the model's most important equations are drawn randomly from pre-specified distributions, and present results in the forms of fan charts and histograms. Our results suggest that under a Business-As-Usual scenario, the median increase of global mean temperature in 2105 relative to 1900 will be around 4.5 °C. The 99 percent confidence interval ranges from 3.0 °C to 6.9 °C. Uncertainty about socio-economic drivers of climate change lie behind a non-trivial part of this uncertainty about global warming.
Handle: RePEc:nbr:nberwo:14426
Template-Type: ReDIF-Paper 1.0
Title: The True Cost of Social Security
Classification-JEL: G12; G13; G23; G38; H2; H55; H6
Author-Name: Alexander W. Blocker
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Stephen A. Ross
Note: PE
Number: 14427
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14427
File-URL: http://www.nber.org/papers/w14427.pdf
File-Format: application/pdf
Publication-Status: published as The True Cost of Social Security, Alexander W. Blocker, Laurence J. Kotlikoff, Stephen A. Ross, Sergio Villar Vallenas. in Tax Policy and the Economy, Volume 33, Moffitt. 2019
Abstract: Implicit government obligations represent the lion's share of government liabilities in the U.S. and many other countries. Yet these liabilities are rarely measured, let alone properly adjusted for their risk. This paper shows, by example, how modern asset pricing can be used to value implicit fiscal debts taking into account their risk properties. The example is the U.S. Social Security System's net liability to working-age Americans. Marking this debt to market makes a big difference; its market value is 23 percent larger than the Social Security trustees' valuation method suggests.
Handle: RePEc:nbr:nberwo:14427
Template-Type: ReDIF-Paper 1.0
Title: Health Capital and the Prenatal Environment: The Effect of Maternal Fasting During Pregnancy
Classification-JEL: I1; I12; J1; J14
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Bhashkar Mazumder
Author-Person: pma1341
Note: AG CH EH
Number: 14428
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14428
File-URL: http://www.nber.org/papers/w14428.pdf
File-Format: application/pdf
Publication-Status: published as American Economic Journal: Applied Economics, 3 (October 2011), 56 - 85.
Abstract: We use the Islamic holy month of Ramadan as a natural experiment in fasting and fetal health. In Michigan births 1989-2006, we find prenatal exposure to Ramadan among Arab mothers results in lower birthweight and reduced gestation length. Exposure to Ramadan in the first month of gestation is also associated with a sizable reduction in the number of male births. In Census data for Uganda, Iraq, and the US we find strong associations between in utero exposure to Ramadan and the likelihood of being disabled as an adult. Effects are particularly large for mental (or learning) disabilities. We also find significant effects on proxies for wealth, earnings, the sex composition of the adult population, and more suggestive evidence of effects on schooling. We find no evidence that negative selection in conceptions during Ramadan accounts for our findings, suggesting that avoiding Ramadan exposure during pregnancy is costly or the long-term effects of fasting unknown.
Handle: RePEc:nbr:nberwo:14428
Template-Type: ReDIF-Paper 1.0
Title: Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana
Classification-JEL: H43; Q4; Q5; Q51
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Author-Name: Laura E. Grant
Author-Person: pgr248
Note: EEE PE
Number: 14429
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14429
File-URL: http://www.nber.org/papers/w14429.pdf
File-Format: application/pdf
Publication-Status: published as Matthew J. Kotchen & Laura E. Grant, 2011. "Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1172-1185, 04.
Abstract: The history of Daylight Saving Time (DST) has been long and controversial. Throughout its implementation during World Wars I and II, the oil embargo of the 1970s, consistent practice today, and recent extensions, the primary rationale for DST has always been to promote energy conservation. Nevertheless, there is surprisingly little evidence that DST actually saves energy. This paper takes advantage of a natural experiment in the state of Indiana to provide the first empirical estimates of DST effects on electricity consumption in the United States since the mid-1970s. Focusing on residential electricity demand, we conduct the first-ever study that uses micro-data on households to estimate an overall DST effect. The dataset consists of more than 7 million observations on monthly billing data for the vast majority of households in southern Indiana for three years. Our main finding is that -- contrary to the policy's intent -- DST increases residential electricity demand. Estimates of the overall increase are approximately 1 percent, but we find that the effect is not constant throughout the DST period. DST causes the greatest increase in electricity consumption in the fall, when estimates range between 2 and 4 percent. These findings are consistent with simulation results that point to a tradeoff between reducing demand for lighting and increasing demand for heating and cooling. We estimate a cost of increased electricity bills to Indiana households of $9 million per year. We also estimate social costs of increased pollution emissions that range from $1.7 to $5.5 million per year. Finally, we argue that the effect is likely to be even stronger in other regions of the United States.
Handle: RePEc:nbr:nberwo:14429
Template-Type: ReDIF-Paper 1.0
Title: Are Structural VARs with Long-Run Restrictions Useful in Developing Business Cycle Theory?
Classification-JEL: C32; C51; E13; E2; E3; E32; E37
Author-Name: V. V. Chari
Author-Person: pch40
Author-Name: Patrick J. Kehoe
Author-Person: pke4
Author-Name: Ellen R. McGrattan
Author-Person: pmc46
Note: EFG
Number: 14430
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14430
File-URL: http://www.nber.org/papers/w14430.pdf
File-Format: application/pdf
Publication-Status: published as Chari, V.V. & Kehoe, Patrick J. & McGrattan, Ellen R., 2008. "Are structural VARs with long-run restrictions useful in developing business cycle theory?," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1337-1352, November.
Abstract: The central finding of the recent structural vector autoregression (SVAR) literature with a differenced specification of hours is that technology shocks lead to a fall in hours. Researchers have used this finding to argue that real business cycle models are unpromising. We subject this SVAR specification to a natural economic test by showing that when applied to data generated from a multiple-shock business cycle model, the procedure incorrectly concludes that the model could not have generated the data as long as demand shocks play a nontrivial role. We also test another popular specification, which uses the level of hours, and show that with nontrivial demand shocks, it cannot distinguish between real business cycle models and sticky price models. The crux of the problem for both SVAR specifications is that available data necessitate a VAR with a small number of lags and, when demand shocks play a nontrivial role, such a VAR is a poor approximation to the model's infinite order VAR.
Handle: RePEc:nbr:nberwo:14430
Template-Type: ReDIF-Paper 1.0
Title: Carbon, Trade Policy, and Carbon Free Trade Areas
Classification-JEL: F18
Author-Name: Yan Dong
Author-Person: pdo210
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE ITI
Number: 14431
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14431
File-URL: http://www.nber.org/papers/w14431.pdf
File-Format: application/pdf
Publication-Status: published as Yan Dong & John Whalley, 2010. "Carbon, Trade Policy and Carbon Free Trade Areas," The World Economy, Blackwell Publishing, vol. 33(9), pages 1073-1094, 09.
Abstract: This paper discusses both the potential contribution that trade policy initiatives can make towards the achievement of significant global carbon emissions reduction and the potential impacts of proposals now circulating for carbon reduction motivated geographical trade arrangements, including carbon free trade areas. We first suggest that trade policy is likely to be a relatively minor consideration in climate change containment. The dominant influence on carbon emissions globally for next several decades will be growth more so than trade and its composition, and in turn, the size of trade seemingly matters more than its composition given differences in emission intensity between tradables and nontradables. We also note that differences in emissions intensity across countries are larger than across products or sectors and so issues of country discrimination in trade policy (and violations of MFN) arises.
We next discuss both unilateral and regional carbon motivated trade policy arrangements, including three potential variants of carbon emission reduction based free trade area arrangements. One is regional trade agreements with varying types of trade preferences towards low carbon intensive products, low carbon new technologies and inputs to low carbon processes. A second is the use of joint border measures against third parties to counteract anti-competitive effects from groups of countries taking on deeper emission reduction commitments. A third is third country trade barriers along with free trade or other regional trade agreements as penalty mechanisms to pressure other countries to join emission reducing environmental agreements. We differentiate among the objectives, forms and possible impacts of each variant. We also speculate as to how the world trading system may evolve in the next few decades as trade policy potentially becomes increasingly dominated by environmental concerns. We suggest that the future evolution of the trading system will likely be with environmentally motivated arrangements acting as an overlay on prevailing trade and financial arrangements in the WTO and IMF, and eventually movement to linked global trade and environmental policy bargaining.
Handle: RePEc:nbr:nberwo:14431
Template-Type: ReDIF-Paper 1.0
Title: Linkage of Tradable Permit Systems in International Climate Policy Architecture
Classification-JEL: F50; Q20; Q40; Q50
Author-Name: Judson Jaffe
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE
Number: 14432
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14432
File-URL: http://www.nber.org/papers/w14432.pdf
File-Format: application/pdf
Abstract: Cap-and-trade systems have emerged as the preferred national and regional instrument for reducing emissions of greenhouse gases throughout the industrialized world, and the Clean Development Mechanism -- an international emission-reduction-credit system -- has developed a substantial constituency, despite some concerns about its performance. Because linkage between tradable permit systems can reduce compliance costs and improve market liquidity, there is great interest in linking cap-and-trade systems to each other, as well as to the CDM and other credit systems. We examine the benefits and concerns associated with various types of linkages, and analyze the near-term and long-term role that linkage may play in a future international climate policy architecture. In particular, we evaluate linkage in three potential roles: as an independent bottom-up architecture, as a step in the evolution of a top-down architecture, and as an ongoing element of a larger climate policy agreement. We also assess how the policy elements of climate negotiations can facilitate or impede linkages. Our analysis throughout is both positive and normative.
Handle: RePEc:nbr:nberwo:14432
Template-Type: ReDIF-Paper 1.0
Title: Timing and Quantity of Consumer Purchases and the Consumer Price Index
Classification-JEL: D12; E31; L11; L16
Author-Name: Rachel Griffith
Author-Person: pgr70
Author-Name: Ephraim Leibtag
Author-Person: ple514
Author-Name: Andrew Leicester
Author-Person: ple570
Author-Name: Aviv Nevo
Author-Person: pne133
Note: IO ME PR
Number: 14433
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14433
File-URL: http://www.nber.org/papers/w14433.pdf
File-Format: application/pdf
Abstract: A common approach to measuring price changes is to look at the change of the expenditure needed to purchase a fixed basket of goods. It is well-known that this approach suffers from problems and creates several biases in the measurement of price changes faced by consumers. Substitution and outlet bias, two commonly studied concerns, are both driven by consumer choices of what and where to buy. However, consumers also make other choices, including how much and when to buy. We discuss the implications of consumers' timing and quantity decisions have on standard practices of computing of computing a price index. We use household-level data on quantities purchased and prices paid to construct a measure of the savings made by consumers' optimizing behaviour in the purchase of food. In particular, we compare the prices actually paid by the consumers to various alternatives that do not allow for substitution. Our analysis suggests that the average consumer makes significant, and comparable in magnitude, savings from the four dimensions of choice that we study. Furthermore, our data suggests significant heterogeneity in consumer behavior, and that this behavior is correlated with demographics. Our findings suggest that ignoring timing and quantity decisions, when computing a price index, can generate biases on the order of magnitude of substitution and outlet biases.
Handle: RePEc:nbr:nberwo:14433
Template-Type: ReDIF-Paper 1.0
Title: Identification with Imperfect Instruments
Classification-JEL: C30; C31; C33
Author-Name: Aviv Nevo
Author-Person: pne133
Author-Name: Adam M. Rosen
Author-Person: pro441
Note: IO PR TWP
Number: 14434
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14434
File-URL: http://www.nber.org/papers/w14434.pdf
File-Format: application/pdf
Publication-Status: published as Aviv Nevo & Adam M. Rosen, 2012. "Identification With Imperfect Instruments," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 659-671, August.
Abstract: Dealing with endogenous regressors is a central challenge of applied research. The standard solution is to use instrumental variables that are assumed to be uncorrelated with unobservables. We instead assume (i) the correlation between the instrument and the error term has the same sign as the correlation between the endogenous regressor and the error term, and (ii) that the instrument is less correlated with the error term than is the endogenous regressor. Using these assumptions, we derive analytic bounds for the parameters. We demonstrate the method in two applications.
Handle: RePEc:nbr:nberwo:14434
Template-Type: ReDIF-Paper 1.0
Title: Work Expectations, Realizations, and Depression in Older Workers
Classification-JEL: I10; I18; J14; J18; J26
Author-Name: Tracy A. Falba
Author-Person: pfa211
Author-Name: William T. Gallo
Author-Name: Jody L. Sindelar
Note: AG EH
Number: 14435
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14435
File-URL: http://www.nber.org/papers/w14435.pdf
File-Format: application/pdf
Publication-Status: published as Work expectations, realizations, and depression in older workers. Tracy A Falba, Jody L Sindelar, William T Gallo Economics Department, Duke University, Durham, NC, USA. The Journal of Mental Health Policy and Economics (Impact Factor: 0.97). 12/2009; 12(4):175-86.
Abstract: We explore the impact on depressive symptoms of deviation in actual labor force behavior at age 62 from earlier expectations. Our sample of 4,241 observations is drawn from the Health and Retirement Study (HRS). We examine workers who were less than 62 years of age at the 1992 HRS baseline, and who had reached age 62 by our study endpoint, enabling comparison of actual labor force withdrawal with earlier expectations. Poisson regression were used to estimate the impact of expected full-time work status on depressive symptoms; regressions are estimated separately for those working fulltime at age 62 and those not working fulltime. We found significant effects on depression at age 62 both for full-time workers who expected not to be working full-time, and for participants not working full-time who expected to be doing so. These results hold even after adjustment for earlier depressive symptoms, sociodemographic and other relevant controls. The findings suggest that working longer and retiring earlier than expected each may compromise psychological well-being. The current financial crisis may result in both scenarios as some workers may have to work longer than expected due to the decline in pension and other wealth while others may retire earlier due to job loss.
Handle: RePEc:nbr:nberwo:14435
Template-Type: ReDIF-Paper 1.0
Title: Not-so-Classical Measurement Errors: A Validation Study of Homescan
Classification-JEL: C81; D12
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Ephraim Leibtag
Author-Person: ple514
Author-Name: Aviv Nevo
Author-Person: pne133
Note: IO LS ME PR
Number: 14436
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14436
File-URL: http://www.nber.org/papers/w14436.pdf
File-Format: application/pdf
Publication-Status: published as Recording Discrepancies in Nielsen Homescan Data: Are They Present and Do They Matter?, with Ephraim Leibtag and Aviv Nevo Quantitative Marketing and Economics, 8(2), June 2010, 207-239 Previously circulated as "Not-So-Classical Measurement Errors: A Validation Study of Homescan"
Abstract: We report results from a validation study of Nielsen Homescan data. We use data from a large grocery chain to match thousands of individual transactions that were recorded by both the retailer (at the store) and the Nielsen Homescan panelist (at home). First, we report how often shopping trips are not reported, and how often trip information, product information, price, and quantity are reported with error. We focus on recording errors in prices, which are more prevalent, and show that they can be classified to two categories, one due to standard recording errors, while the other due to the way Nielsen constructs the price data. We then show how the validation data can be used to correct the impact of recording errors on estimates obtained from Nielsen Homescan data. We use a simple application to illustrate the impact of recording errors as well as the ability to correct for these errors. The application suggests that while recording errors are clearly present, and potentially impact results, corrections, like the one we employ, can be adopted by users of Homescan data to investigate the robustness of their results.
Handle: RePEc:nbr:nberwo:14436
Template-Type: ReDIF-Paper 1.0
Title: Real Exchange Rate Movements and the Relative Price of Non-traded Goods
Classification-JEL: F31; F41
Author-Name: Caroline M. Betts
Author-Person: pbe370
Author-Name: Timothy J. Kehoe
Author-Person: pke16
Note: EFG
Number: 14437
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14437
File-URL: http://www.nber.org/papers/w14437.pdf
File-Format: application/pdf
Abstract: We study the quarterly bilateral real exchange rate and the relative price of non-traded to traded goods for 1225 country pairs over 1980-2005. We show that the two variables are positively correlated, but that movements in the relative price measure are smaller than those in the real exchange rate. The relation between the two variables is stronger when there is an intense trade relationship between two countries and when the variance of the real exchange rate between them is small. The relation does not change for rich/poor country bilateral pairs or for high inflation/low inflation country pairs. We identify an anomaly: The relation between the real exchange rate and relative price of non-traded goods for US/EU bilateral trade partners is unusually weak.
Handle: RePEc:nbr:nberwo:14437
Template-Type: ReDIF-Paper 1.0
Title: Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption?
Classification-JEL: F0; F15
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Katharina Steiner
Note: IFM
Number: 14438
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14438
File-URL: http://www.nber.org/papers/w14438.pdf
File-Format: application/pdf
Abstract: We ask whether Poland is at risk of the boom-bust problem that has afflicted economies around the time of euro adoption. Our answer, inevitably, is mixed. On the one hand the fact that Poland is an outlier, credit-growth wise, accentuates the danger of a boom if one believes in mean reversion. Our econometrics indicate that the fall in interest rates that will flow from expectations of euro adoption will further feed that boom. On the other hand the fact that interest rates have already converged part way to euro-area levels (and more extensively than in earlier adopters that experienced a sharp fall in rates and a pronounced credit boom), especially in the case of lending to firms, suggests that this shock may be less intense in Poland. And it is certainly conceivable that the same policies and country characteristics (not always visible to the econometrician) that have restrained credit growth in the past may continue to do so in the future. The broader literature also points to two set of factors, the first of which makes the danger of an unsustainable credit boom more immediate, the second of which makes it more remote. In the first category are the continuing limitations of the supervisory framework and the weakness of the finance minister in the budget-making process. In the second are a record of rigorous prudential supervision and the existence of relatively competitive labor markets.
Handle: RePEc:nbr:nberwo:14438
Template-Type: ReDIF-Paper 1.0
Title: Portfolio Substitution and the Revenue Cost of Exempting State and Local Government Interest Payments from Federal Income Tax
Classification-JEL: H24; H7
Author-Name: James M. Poterba
Author-Person: ppo19
Author-Name: Arturo Ramirez Verdugo
Author-Person: pra234
Note: PE
Number: 14439
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14439
File-URL: http://www.nber.org/papers/w14439.pdf
File-Format: application/pdf
Publication-Status: published as 108. "Portfolio Substitution and the Revenue Cost of the Federal Income Tax Exemption for State and Local Government Bonds," National Tax Journal 64 (2011), number 2 (part 2), 591-614. (with A. Ramirez Verdugo)
Abstract: This paper explores how alternative assumptions about household portfolio behavior affect estimates of the revenue cost of excluding state and local government interest payments from the federal income tax base. Standard tax expenditure estimates assume that current holders of tax-exempt bonds would replace their holdings of tax-exempt bonds with taxable bonds if the tax exemption were eliminated. We consider a number of alternative possible portfolio responses. Because taxable bonds are among the most heavily taxed assets, assuming that investors holding tax-exempt bonds would otherwise hold taxable bonds yields a larger estimate of the revenue cost of tax exemption than many alternative assumptions. Based on data from the 2004 Survey of Consumer Finances, we estimate that the revenue cost of tax exemption under the "taxable bond substitution hypothesis" is $14.2 billion, compared with $10.1 billion if corporate stock replaces tax-exempt bonds in household portfolios, and $7.9 billion if investors distribute their tax-exempt bond holdings in proportion to the other assets currently in their portfolios. We also explore the revenue effects of capping the dollar amount of tax-exempt interest per tax return and of limiting tax-exempt interest as a fraction of AGI.
Handle: RePEc:nbr:nberwo:14439
Template-Type: ReDIF-Paper 1.0
Title: Realization Utility
Classification-JEL: G11; G12
Author-Name: Nicholas C. Barberis
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP
Number: 14440
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14440
File-URL: http://www.nber.org/papers/w14440.pdf
File-Format: application/pdf
Publication-Status: published as Barberis, Nicholas & Xiong, Wei, 2012. "Realization utility," Journal of Financial Economics, Elsevier, vol. 104(2), pages 251-271.
Abstract: A number of authors have suggested that investors derive utility from realizing gains and losses on assets that they own. We present a model of this "realization utility," analyze its predictions, and show that it can shed light on a number of puzzling facts. These include the disposition effect, the poor trading performance of individual investors, the higher volume of trade in rising markets, the effect of historical highs on the propensity to sell, the individual investor preference for volatile stocks, the low average return of volatile stocks, and the heavy trading associated with highly valued assets.
Handle: RePEc:nbr:nberwo:14440
Template-Type: ReDIF-Paper 1.0
Title: Auction Design and Tacit Collusion in FCC Spectrum Auctions
Classification-JEL: L0; L4; L51
Author-Name: Patrick Bajari
Author-Name: Jungwon Yeo
Note: IO
Number: 14441
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14441
File-URL: http://www.nber.org/papers/w14441.pdf
File-Format: application/pdf
Publication-Status: published as Bajari, Patrick & Yeo, Jungwon, 2009. "Auction design and tacit collusion in FCC spectrum auctions," Information Economics and Policy, Elsevier, vol. 21(2), pages 90-100, June.
Abstract: The Federal Communications Commission (FCC) has used auctions to award spectrum since 1994. During this time period, the FCC has experimented with a variety of auctions rules including click box bidding and anonymous bidding. These rule changes make the actions of bidders less visible during the auction and also limit the set of bids which can be submitted by a bidder during a particular round. Economic theory suggests that tacit collusion may be more difficult as a result. We examine this proposition using data from 4 auctions: the PCS C Block, Auction 35, the Advanced Wireless Service auction and the 700 Mhz auction. We examine the frequency of jump bids, retaliatory bids and straightforward bids across these auctions. While this simple descriptive exercise has a number of limitations, the data suggests that these rule changes did limit firms' ability to tacitly collude.
Handle: RePEc:nbr:nberwo:14441
Template-Type: ReDIF-Paper 1.0
Title: Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement
Classification-JEL: I21; J24; J33
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: CH ED LS
Number: 14442
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14442
File-URL: http://www.nber.org/papers/w14442.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Rothstein, 2010. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 175-214, February.
Abstract: Growing concerns over the achievement of U.S. students have led to proposals to reward good teachers and penalize (or fire) bad ones. The leading method for assessing teacher quality is "value added" modeling (VAM), which decomposes students' test scores into components attributed to student heterogeneity and to teacher quality. Implicit in the VAM approach are strong assumptions about the nature of the educational production function and the assignment of students to classrooms. In this paper, I develop falsification tests for three widely used VAM specifications, based on the idea that future teachers cannot influence students' past achievement. In data from North Carolina, each of the VAMs' exclusion restrictions are dramatically violated. In particular, these models indicate large "effects" of 5th grade teachers on 4th grade test score gains. I also find that conventional measures of individual teachers' value added fade out very quickly and are at best weakly related to long-run effects.
Handle: RePEc:nbr:nberwo:14442
Template-Type: ReDIF-Paper 1.0
Title: What Makes Them Tick? Employee Motives and Firm Innovation
Classification-JEL: O3; O30; O31; O32
Author-Name: Henry Sauermann
Author-Name: Wesley M. Cohen
Note: PR
Number: 14443
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14443
File-URL: http://www.nber.org/papers/w14443.pdf
File-Format: application/pdf
Publication-Status: published as Journal Management Science archive Volume 56 Issue 12, December 2010 Pages 2134-2153 INFORMS Institute for Operations Research and the Management Sciences (INFORMS), Linthicum, Maryland, USA table of contents doi>10.1287/mnsc.1100.1241
Abstract: We examine the impact of individual-level motives upon innovative effort and performance in firms. Drawing from economics and social psychology, we develop a model of the impact of individuals' motives and incentives upon their innovative effort and performance. Using data on over 11,000 industrial scientists and engineers (SESTAT 2003), we find that individuals' motives have significant effects upon innovative effort and performance. These effects vary significantly, however, by the particular kind of motive (e.g., desire for intellectual challenge vs. pay). We also find that intrinsic and extrinsic motives affect innovative performance even when controlling for effort, suggesting that motives affect not only the level of individual effort, but also its quality. Overall, intrinsic motives, particularly the desire for intellectual challenge, appear to benefit innovation more than extrinsic motives such as pay.
Handle: RePEc:nbr:nberwo:14443
Template-Type: ReDIF-Paper 1.0
Title: Sudden Stops, Financial Crises and Leverage: A Fisherian Deflation of Tobin's Q
Classification-JEL: D52; E32; E44; F32; F41
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Note: IFM
Number: 14444
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14444
File-URL: http://www.nber.org/papers/w14444.pdf
File-Format: application/pdf
Publication-Status: published as Enrique G Mendoza, 2010. "Sudden Stops, Financial Crises, and Leverage," American Economic Review, vol 100(5), pages 1941-1966.
Abstract: This paper shows that the quantitative predictions of a DSGE model with an endogenous collateral constraint are consistent with key features of the emerging markets' Sudden Stops. Business cycle dynamics produce periods of expansion during which the ratio of debt to asset values raises enough to trigger the constraint. This sets in motion a deflation of Tobin's Q driven by Irving Fisher's debt-deflation mechanism, which causes a spiraling decline in credit access and in the price and quantity of collateral assets. Output and factor allocations decline because the collateral constraint limits access to working capital financing. This credit constraint induces significant amplification and asymmetry in the responses of macro-aggregates to shocks. Because of precautionary saving, Sudden Stops are low probability events nested within normal cycles in the long run.
Handle: RePEc:nbr:nberwo:14444
Template-Type: ReDIF-Paper 1.0
Title: Media Bias and Influence: Evidence from Newspaper Endorsements
Classification-JEL: D7; H0
Author-Name: Brian G. Knight
Author-Person: pkn7
Author-Name: Chun-Fang Chiang
Author-Person: pch1706
Note: PE POL
Number: 14445
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14445
File-URL: http://www.nber.org/papers/w14445.pdf
File-Format: application/pdf
Publication-Status: published as Chun-Fang Chiang & Brian Knight, 2011. "Media Bias and Influence: Evidence from Newspaper Endorsements," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 795-820.
Abstract: This paper investigates the relationship between media bias and the influence of the media on voting in the context of newspaper endorsements. We first develop a simple econometric model in which voters choose candidates under uncertainty and rely on endorsements from better informed sources. Newspapers are potentially biased in favor of one of the candidates and voters thus rationally account for the credibility of any endorsements. Our primary empirical finding is that endorsements are influential in the sense that voters are more likely to support the recommended candidate after publication of the endorsement. The degree of this influence, however, depends upon the credibility of the endorsement. In this way, endorsements for the Democratic candidate from left-leaning newspapers are less influential than are endorsements from neutral or right-leaning newspapers, and likewise for endorsements for the Republican. These findings suggest that voters do rely on the media for information during campaigns but that the extent of this reliance depends upon the degree and direction of any bias.
Handle: RePEc:nbr:nberwo:14445
Template-Type: ReDIF-Paper 1.0
Title: Market Responses to the Panic of 2008
Classification-JEL: E20; E32; R21
Author-Name: Casey Mulligan
Author-Person: pmu64
Author-Name: Luke Threinen
Note: EFG ME PE
Number: 14446
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14446
File-URL: http://www.nber.org/papers/w14446.pdf
File-Format: application/pdf
Abstract: We model the panic of 2008 as part of the wealth and substitution effects deriving from a housing price crash that began in 2006. The dissipation of the wealth effect stimulates a reorganization of the banking industry and increases in employment, GDP, and unemployment. The release of resources from the housing sector lowers investment goods prices, and thereby devalues existing non-residential capital while stimulating non-residential investment. These predictions are compared with measured U.S. economic performance from 2006 to 2008 Q2.
Handle: RePEc:nbr:nberwo:14446
Template-Type: ReDIF-Paper 1.0
Title: Inferring Welfare Maximizing Treatment Assignment under Budget Constraints
Classification-JEL: C01; C14; I38
Author-Name: Debopam Bhattacharya
Author-Person: pbh33
Author-Name: Pascaline Dupas
Author-Person: pdu104
Note: CH EH TWP
Number: 14447
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14447
File-URL: http://www.nber.org/papers/w14447.pdf
File-Format: application/pdf
Publication-Status: published as Bhattacharya, Debopam & Dupas, Pascaline, 2012. "Inferring welfare maximizing treatment assignment under budget constraints," Journal of Econometrics, Elsevier, vol. 167(1), pages 168-196.
Abstract: This paper concerns the problem of allocating a binary treatment among a target population based on observed covariates. The goal is to (i) maximize the mean social welfare arising from an eventual outcome distribution, when a budget constraint limits what fraction of the population can be treated and (ii) to infer the dual value, i.e. the minimum resources needed to attain a specific level of mean welfare via efficient treatment assignment. We consider a treatment allocation procedure based on sample data from randomized treatment assignment and derive asymptotic frequentist confidence interval for the welfare generated from it. We propose choosing the conditioning covariates through cross-validation. The methodology is applied to the efficient provision of anti-malaria bed net subsidies, using data from a randomized experiment conducted in Western Kenya. We find that subsidy allocation based on wealth, presence of children and possession of bank account can lead to a rise in subsidy use by about 9 percentage points compared to allocation based on wealth only, and by 17 percentage points compared to a purely random allocation.
Handle: RePEc:nbr:nberwo:14447
Template-Type: ReDIF-Paper 1.0
Title: Post-1500 Population Flows and the Long Run Determinants of Economic Growth and Inequality
Classification-JEL: F22; N30; O40
Author-Name: Louis Putterman
Author-Person: ppu14
Author-Name: David N. Weil
Author-Person: pwe24
Note: EFG
Number: 14448
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14448
File-URL: http://www.nber.org/papers/w14448.pdf
File-Format: application/pdf
Publication-Status: published as Louis Putterman & David N. Weil, 2010. "Post-1500 Population Flows and the Long-Run Determinants of Economic Growth and Inequality," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1627-1682, November.
Abstract: We construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500. Using this matrix, we analyze how post-1500 migration has influenced the level of GDP per capita and within-country income inequality in the world today. Indicators of early development such as early state history and the timing of transition to agriculture have much better predictive power for current GDP when one looks at the ancestors of the people who currently live in a country than when one considers the history on that country's territory, without adjusting for migration. Measures of the ethnic or linguistic heterogeneity of a country's current population do not predict income inequality as well as measures of the ethnic or linguistic heterogeneity of the current population's ancestors. An even better predictor of current inequality in a country is the variance of early development history of the country's inhabitants, with ethnic groups originating in regions having longer histories of agriculture and organized states tending to be at the upper end of a country's income distribution. However, high within-country variance of early development also predicts higher income per capita, holding constant the average level of early development.
Handle: RePEc:nbr:nberwo:14448
Template-Type: ReDIF-Paper 1.0
Title: When Does Improving Health Raise GDP?
Classification-JEL: I10; O4
Author-Name: Quamrul H. Ashraf
Author-Name: Ashley Lester
Author-Person: ple220
Author-Name: David N. Weil
Author-Person: pwe24
Note: EFG
Number: 14449
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14449
File-URL: http://www.nber.org/papers/w14449.pdf
File-Format: application/pdf
Publication-Status: published as When Does Improving Health Raise GDP?, Quamrul H. Ashraf, Ashley Lester, David N. Weil. in NBER Macroeconomics Annual 2008, Volume 23, Acemoglu, Rogoff, and Woodford. 2009
Abstract: We assess quantitatively the effect of exogenous health improvements on output per capita. Our simulation model allows for a direct effect of health on worker productivity, as well as indirect effects that run through schooling, the size and age-structure of the population, capital accumulation, and crowding of fixed natural resources. The model is parameterized using a combination of microeconomic estimates, data on demographics, disease burdens, and natural resource income in developing countries, and standard components of quantitative macroeconomic theory. We consider both changes in general health, proxied by improvements in life expectancy, and changes in the prevalence of two particular diseases: malaria and tuberculosis. We find that the effects of health improvements on income per capita are substantially lower than those that are often quoted by policy-makers, and may not emerge at all for three decades or more after the initial improvement in health. The results suggest that proponents of efforts to improve health in developing countries should rely on humanitarian rather than economic arguments.
Handle: RePEc:nbr:nberwo:14449
Template-Type: ReDIF-Paper 1.0
Title: How Do Gasoline Prices Affect Fleet Fuel Economy?
Classification-JEL: H23; L62; Q31
Author-Name: Shanjun Li
Author-Person: pli535
Author-Name: Roger von Haefen
Author-Person: pvo149
Author-Name: Christopher Timmins
Note: EEE PE
Number: 14450
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14450
File-URL: http://www.nber.org/papers/w14450.pdf
File-Format: application/pdf
Publication-Status: published as Shanjun Li & Christopher Timmins & Roger H. von Haefen, 2009. "How Do Gasoline Prices Affect Fleet Fuel Economy?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 113-37, August.
Abstract: Exploiting a rich data set of passenger vehicle registrations in twenty U.S. metropolitan statistical areas from 1997 to 2005, we examine the effects of gasoline prices on the automotive fleet's composition. We find that high gasoline prices affect fleet fuel economy through two channels: (1) shifting new auto purchases towards more fuel-efficient vehicles, and (2) speeding the scrappage of older, less fuel-efficient used vehicles. Policy simulations based on our econometric estimates suggest that a 10% increase in gasoline prices from 2005 levels will generate a 0.22% increase in fleet fuel economy in the short run and a 2.04% increase in the long run.
Handle: RePEc:nbr:nberwo:14450
Template-Type: ReDIF-Paper 1.0
Title: Using Elicited Choice Probabilities to Estimate Random Utility Models: Preferences for Electricity Reliability
Classification-JEL: C25; C42; D12; L51; L94
Author-Name: Asher A. Blass
Author-Person: pbl36
Author-Name: Saul Lach
Author-Person: pla110
Author-Name: Charles F. Manski
Author-Person: pma111
Note: EEE IO
Number: 14451
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14451
File-URL: http://www.nber.org/papers/w14451.pdf
File-Format: application/pdf
Publication-Status: published as Asher A. Blass & Saul Lach & Charles F. Manski, 2010. "Using Elicited Choice Probabilities To Estimate Random Utility Models: Preferences For Electricity Reliability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 421-440, 05.
Abstract: When data on actual choices are not available, researchers studying preferences sometimes pose choice scenarios and ask respondents to state the actions they would choose if they were to face these scenarios. The data on stated choices are then used to estimate random utility models, as if they are data on actual choices. Stated choices may differ from actual ones because researchers typically provide respondents with less information than they would have facing actual choice problems. Elicitation of choice probabilities overcomes this problem by permitting respondents to express uncertainty about their behavior. This paper shows how to use elicited choice probabilities to estimate random utility models with random coefficients and applies the methodology to estimate preferences for electricity reliability in Israel.
Handle: RePEc:nbr:nberwo:14451
Template-Type: ReDIF-Paper 1.0
Title: Income Dispersion and Counter-Cyclical Markups
Classification-JEL: E32
Author-Name: Chris Edmond
Author-Person: ped23
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: EFG ME
Number: 14452
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14452
File-URL: http://www.nber.org/papers/w14452.pdf
File-Format: application/pdf
Publication-Status: published as Edmond, Chris & Veldkamp, Laura, 2009. "Income dispersion and counter-cyclical markups," Journal of Monetary Economics, Elsevier, vol. 56(6), pages 791-804, September.
Abstract: Recent advances in measuring cyclical changes in the income distribution raise new questions: How might these distributional changes affect the business cycle itself? We show how counter-cyclical income dispersion can generate counter-cyclical markups in the goods market, without any preference shocks or price-setting frictions. In recessions, heterogeneous labor productivity shocks raise income dispersion, lower the price elasticity of demand, and increase imperfectly competitive firms' optimal markups. The calibrated model explains not only many cyclical features of markups, but also cyclical, long-run and cross-state patterns of standard business cycle aggregates.
Handle: RePEc:nbr:nberwo:14452
Template-Type: ReDIF-Paper 1.0
Title: The US as the "Demander of Last Resort" and its Implications on China's Current Account
Classification-JEL: F15; F32
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Note: IFM ITI
Number: 14453
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14453
File-URL: http://www.nber.org/papers/w14453.pdf
File-Format: application/pdf
Publication-Status: published as THE USA AS THE ‘DEMANDER OF LAST RESORT’ AND THE IMPLICATIONS FOR CHINA'S CURRENT ACCOUNT Joshua Aizenman1, Yothin Jinjarak2,* Article first published online: 27 JUL 2009 DOI: 10.1111/j.1468-0106.2009.00450.x © 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Asia Pty Ltd Issue Pacific Economic Review Pacific Economic Review Volume 14, Issue 3, pages 426–442, August 2009
Abstract: This paper evaluates the degree to which current account patterns are explained by the variables suggested by the literature, and reflects on possible future patterns. We start with panel regressions explaining the current account of 69 countries during 1981-2006. We identify an asymmetric effect of the US as the "demander of last resort:" a 1% increase in the lagged US current account deficit is associated with 0.5% increase of current account surpluses of countries running surpluses, but with insignificant changes of current account deficits of countries running deficits. Overall, the panel regressions account for not more than 2/3 of the variation. We apply the regression results to assess China's current account over the next six years, projecting a large drop in its account/GDP surpluses.
Handle: RePEc:nbr:nberwo:14453
Template-Type: ReDIF-Paper 1.0
Title: The Euro and Firm Restructuring
Classification-JEL: F33; J24; L16; O47
Author-Name: Matteo Bugamelli
Author-Person: pbu83
Author-Name: Fabiano Schivardi
Author-Person: psc82
Author-Name: Roberta Zizza
Author-Person: pzi39
Note: IO LS PR
Number: 14454
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14454
File-URL: http://www.nber.org/papers/w14454.pdf
File-Format: application/pdf
Publication-Status: published as The Euro and Firm Restructuring, Matteo Bugamelli, Fabiano Schivardi, Roberta Zizza. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: We test whether and how the adoption of the euro, narrowly defined as the end of competitive devaluations, has affected member states' productive structures, distinguishing between within and across sector reallocation. We find evidence that the euro has been accompanied by a reallocation of activity within rather than across sectors. Since its adoption, productivity growth has been relatively stronger in country-sectors that once relied more on competitive devaluations to regain price competitiveness. This effect is robust to potential omitted-variable bias and correlated effects. Firm-level evidence from Italian manufacturing confirms that low-tech businesses, which arguably benefitted most from devaluations, have been restructuring more since the adoption of the euro. Restructuring has entailed a shift of business focus from production to upstream and downstream activities, such as product design, advertising, marketing and distribution, and a corresponding reduction in the share of blue collar workers.
Handle: RePEc:nbr:nberwo:14454
Template-Type: ReDIF-Paper 1.0
Title: Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance
Classification-JEL: I11; L13
Author-Name: Randall D. Cebul
Author-Name: James B. Rebitzer
Author-Person: pre77
Author-Name: Lowell J. Taylor
Author-Person: pta912
Author-Name: Mark E. Votruba
Note: EH LS
Number: 14455
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14455
File-URL: http://www.nber.org/papers/w14455.pdf
File-Format: application/pdf
Publication-Status: published as Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2011. "Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance," American Economic Review, American Economic Association, vol. 101(5), pages 1842-71, August.
Abstract: We analyze the role of search frictions in the market for commercial health insurance. Frictions increase the cost of insurance by enabling insurers to set price above marginal cost, and by creating incentives for inefficiently high levels of marketing. Frictions also lead to price dispersion for identical products and, as a consequence, to increases in the rate of insurance turnover. Our empirical analysis indicates that frictions increase prices enough to transfer 13.2% of consumer surplus from employer groups to insurers (approximately $34.4 billion in 1997), and increase employer group turnover by 64% for the average insurance policy. This heightened turnover reduces insurer incentives to invest in the future health of their policy holders. Our analysis also suggests that a publicly-financed insurance option might improve private insurance markets by reducing distortions induced by search frictions.
Handle: RePEc:nbr:nberwo:14455
Template-Type: ReDIF-Paper 1.0
Title: Paying the Piper: The High Cost of Funerals in South Africa
Classification-JEL: D12; O12
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Anu Garrib
Author-Name: Alicia Menendez
Author-Name: Analia Olgiati
Note: AG
Number: 14456
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14456
File-URL: http://www.nber.org/papers/w14456.pdf
File-Format: application/pdf
Publication-Status: published as Anne Case & Anu Garrib & Alicia Menendez & Analia Olgiati, 2013. "Paying the Piper: The High Cost of Funerals in South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 62(1), pages 1 - 20.
Abstract: We analyze funeral arrangements following the deaths of 3,751 people who died between January 2003 and December 2005 in the Africa Centre Demographic Surveillance Area. We find that, on average, households spend the equivalent of a year's income for an adult's funeral, measured at median per capita African (Black) income. Approximately one-quarter of all individuals had some form of insurance, which helped surviving household members defray some fraction of funeral expenses. However, an equal fraction of households borrowed money to pay for the funeral. We develop a model, consistent with ethnographic work in this area, in which households respond to social pressure to bury their dead in a style consistent with the observed social status of the household and that of the deceased. Households that cannot afford a funeral commensurate with social expectations must borrow money to pay for the funeral. The model leads to empirical tests, and we find results consistent with our model of household decision-making.
Handle: RePEc:nbr:nberwo:14456
Template-Type: ReDIF-Paper 1.0
Title: Fear of Rejection? Tiered Certification and Transparency
Classification-JEL: D82; O31; O34
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Jean Tirole
Author-Person: pti33
Note: CF
Number: 14457
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14457
File-URL: http://www.nber.org/papers/w14457.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Josh Lerner & Jean Tirole, 2013. "Fear of rejection? Tiered certification and transparency," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 610-631, December.
Abstract: The sub-prime crisis has shown a harsh spotlight on the practices of securities underwriters, which provided too many complex securities that proved to ultimately have little value. This uproar calls attention to the fact that the literature on intermediaries has carefully analyzed their incentives, but that we know little about the broader strategic dimensions of this market. The paper explores three related strategic dimensions of the certification market: the publicity given to applications, the coarseness of rating patterns and the sellers' dynamic certification strategies. In the model, certifiers respond to the sellers' desire to get a chance to be highly rated and to limit the stigma from rejection. We find conditions under which sellers opt for an ambitious certification strategy, in which they apply to a demanding, but non-transparent certifier and lower their ambitions when rejected. We derive the comparative statics with respect to the sellers' initial reputation, the probability of fortuitous disclosure, the sellers' self-knowledge and impatience, and the concentration of the certification industry. We also analyze the possibility that certifiers opt for a quick turnaround time at the expense of a lower accuracy. Finally, we investigate the opportunity of regulating transparency.
Handle: RePEc:nbr:nberwo:14457
Template-Type: ReDIF-Paper 1.0
Title: Measuring Labor Earnings Inequality using Public-Use March Current Population Survey Data: The Value of Including Variances and Cell Means When Imputing Topcoded Values
Classification-JEL: C8; D31; J3
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Shuaizhang Feng
Author-Name: Jeff Larrimore
Author-Person: pla377
Note: LS PE TWP
Number: 14458
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14458
File-URL: http://www.nber.org/papers/w14458.pdf
File-Format: application/pdf
Publication-Status: published as Burkhauser, Richard V., Shuaizhang Feng, and Jeff Larrimore. 2010. “Improving Imputations of Top Incomes in the Public-Use Current Population Survey by Using Both Cell-Means and Variances.” Economic Letters, 108: 69-72.
Abstract: Using the Census Bureau's internal March Current Population Surveys (CPS) file, we construct and make available variances and cell means for all topcoded income values in the public-use version of these data. We then provide a procedure that allows researchers with access only to the public-use March CPS data to take advantage of this added information when imputing its topcoded income values. As an example of its value we show how our new procedure improves on existing imputation methods in the labor earnings inequality literature.
Handle: RePEc:nbr:nberwo:14458
Template-Type: ReDIF-Paper 1.0
Title: The Skill Composition of Immigrants and the Generosity of the Welfare State: Free vs. Policy-Controlled Migration
Classification-JEL: F15; F2; F22
Author-Name: Alon Cohen
Author-Name: Assaf Razin
Author-Person: pra388
Note: IFM
Number: 14459
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14459
File-URL: http://www.nber.org/papers/w14459.pdf
File-Format: application/pdf
Abstract: The paper analyzes the effect of the generosity of the welfare state on the skill composition of immigrants. We develop a parsimonious model in which the effect of an increase in the generosity (and taxes) of the welfare state on the skill composition of immigrants under free migration is negative. The reason is that welfare state benefits attract unskilled migrants because they contribute to tax revenues less than what they gain from benefits; and this generosity works to deter skilled immigrants, because they contribute in taxes more than in benefits. In sharp contrast, the effect of an increase in the generosity (and taxes) of the welfare state on the skill composition of migrants is positive if migration is controlled by policy. Being net contributors to the welfare state, skilled migrants can help finance a more generous welfare-state system; thus, they are preferred by the policy maker over unskilled migrants. We take the prediction of the model to cross-sectional data on source-host, OECD-EU country pairs in the year 2000. The identification strategy is to use the decomposition the source-host country pairs into two groups: one group, a "free migration" group, source-host country pairs within the EU, and another group, "policy-controlled migration" group, the pairs from non-EU countries into the EU. We find evidence in support of the predictions of the parsimonious model, that the generosity of the welfare state adversely affects the skill-composition of migrants under free migration; but it exerts a more positive effect under controlled migration, relative to the free migration regime.
Handle: RePEc:nbr:nberwo:14459
Template-Type: ReDIF-Paper 1.0
Title: China's Participation in Global Environmental Negotiations
Classification-JEL: Q54; Q56
Author-Name: Huifang Tian
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE ITI
Number: 14460
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14460
File-URL: http://www.nber.org/papers/w14460.pdf
File-Format: application/pdf
Abstract: In the paper we discuss China's participation in both the 2009 Copenhagen negotiations on a post-Kyoto global climate change regime currently under way and out beyond Copenhagen in further negotiations likely to follow. China is now both the largest and most rapidly growing carbon emitter, and has much higher emission intensity relative to GDP than OECD countries. In the Copenhagen negotiation, there will be strong pressure on China to take on emissions reduction commitments and China's concern will be to do so in ways that allow continuation of a high growth rate and fast development. Central to this will be maintaining access to OECD markets for manufactured exports in face of potential environmental protectionism. Thus the broad approach seems likely to be to take on environmental commitments in part in return for stronger guarantees of access to export markets abroad. This involves directly linked trade and environmental commitments although how linkage can be made explicit is a major issue. More narrowly, the issues that seem likely to dominate the climate change negotiating agenda from China's viewpoint are the interpretation of the common but differentiated responsibilities (CBDR) principle adopted in Kyoto, the choice of negotiating instruments and form of emission commitments, and the size (and form) of accompanying financial funds for adaptation and innovation. We suggest that a possible interpretation of CBDR reflecting China's desire to leave room to grow when undertaking emission reduction commitments might be for China to take on emission intensity commitments while OECD countries take on emission level commitments. Larger funds and flexibility in their use will also raise China's willingness to make commitments.
Handle: RePEc:nbr:nberwo:14460
Template-Type: ReDIF-Paper 1.0
Title: Testing the Melitz Model of Trade: An Application to U.S. Motion Picture Exports
Classification-JEL: F12; F2
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Chong Xiang
Author-Person: pxi42
Note: ITI
Number: 14461
Creation-Date: 2008-10
Order-URL: http://www.nber.org/papers/w14461
File-URL: http://www.nber.org/papers/w14461.pdf
File-Format: application/pdf
Abstract: In this paper, we develop a simple empirical method to test two alternative versions of the Melitz (2003) model, one with global fixed export costs and one with bilateral fixed export costs. With global costs, import sales per product variety (relative to domestic sales per variety) are decreasing in variable trade barriers, as a result of adjustment occurring along the intensive margin of trade. With bilateral costs, imports per product variety are increasing in fixed trade costs, due to adjustment occurring along the extensive margin. We apply our approach to data on imports of U.S. motion pictures in 46 countries over 1995-2006. Imports per product variety are decreasing in geographic distance, linguistic distance, and other measures of trade costs, consistent with adjustment to these costs occurring along the intensive margin. There is relatively little variation in the number of U.S. movies that countries import but wide variation in the box-office revenues per movie. The data thus appear to reject the bilateral-fixed-export-cost model in favor of the global-fixed-export-cost model.
Handle: RePEc:nbr:nberwo:14461
Template-Type: ReDIF-Paper 1.0
Title: The Rise of Retirement Among African Americans: Wealth and Social Security Effects
Classification-JEL: J14; J26; N31
Author-Name: Dora L. Costa
Author-Person: pco358
Note: AG DAE LS PE
Number: 14462
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14462
File-URL: http://www.nber.org/papers/w14462.pdf
File-Format: application/pdf
Abstract: I examine the effects of an unearned income transfer on the retirement rates and living arrangements of a very poor population by studying the effects of pensions on the decisions of black Union Army veterans. I find that blacks were 2 to 5 times as responsive as whites to income transfers in their retirement decisions and 6 to 8 times as responsive in their choice of independent living arrangements. I argue that blacks' greater poverty explains their responsiveness to pensions. My findings have implications for understanding racial differences in trends in retirement and independent living. I show that the retirement rates of both blacks and whites rose between 1900 and 1930 but that convergence in black and white rates and in living arrangements only occurred between 1930 and 1950. I argue that income effects from the institution of Social Security explain up to half of the convergence in black-white retirement rates and in living arrangements.
Handle: RePEc:nbr:nberwo:14462
Template-Type: ReDIF-Paper 1.0
Title: An Arbitrage-Free Generalized Nelson-Siegel Term Structure Model
Classification-JEL: G1; G12
Author-Name: Jens H.E. Christensen
Author-Person: pch1126
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Glenn D. Rudebusch
Author-Person: pru10
Note: AP EFG IFM
Number: 14463
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14463
File-URL: http://www.nber.org/papers/w14463.pdf
File-Format: application/pdf
Publication-Status: published as Jens H. E. Christensen & Francis X. Diebold & Glenn D. Rudebusch, 2009. "An arbitrage-free generalized Nelson--Siegel term structure model," Econometrics Journal, Royal Economic Society, vol. 12(3), pages C33-C64, November.
Abstract: The Svensson generalization of the popular Nelson-Siegel term structure model is widely used by practitioners and central banks. Unfortunately, like the original Nelson-Siegel specification, this generalization, in its dynamic form, does not enforce arbitrage-free consistency over time. Indeed, we show that the factor loadings of the Svensson generalization cannot be obtained in a standard finance arbitrage-free affine term structure representation. Therefore, we introduce a closely related generalized Nelson-Siegel model on which the no-arbitrage condition can be imposed. We estimate this new arbitrage-free generalized Nelson-Siegel model and demonstrate its tractability and good in-sample fit.
Handle: RePEc:nbr:nberwo:14463
Template-Type: ReDIF-Paper 1.0
Title: Risk Taking and Gender in Hierarchies
Classification-JEL: D63; J08
Author-Name: Suzanne Scotchmer
Author-Person: psc49
Note: LE LS
Number: 14464
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14464
File-URL: http://www.nber.org/papers/w14464.pdf
File-Format: application/pdf
Publication-Status: published as Scotchmer, Suzanne, 2008. "Risk taking and gender in hierarchies," Theoretical Economics, Society for Economic Theory, vol. 3(4), pages 499-524, December.
Abstract: In a labor market hierarchy, promotions are affected by the noisiness of information about the candidates. I study the hypothesis that males are more risk taking than females, and its implications for rates of promotion and abilities of survivors. I define promotion hierarchies with and without memory, where memory means that promotion depends on the entire history of success. In both types of hierarchies, the surviving risk takers will have lower average ability whenever they have a higher survival rate. Further, even if more risk takers than non risk takers are promoted in the beginning of the hierarchy, that will be reversed over time. The risk takers will eventually have a lower survival rate, but higher ability. As a consequence of these differences, the various requirements of employment law cannot simultaneously be satisfied. Further, if promotion standards are chosen to maximize profit, the standards will reflect gender in ways that are difficult to distinguish from discriminatory intent.
Handle: RePEc:nbr:nberwo:14464
Template-Type: ReDIF-Paper 1.0
Title: What Happened To The Quants In August 2007?: Evidence from Factors and Transactions Data
Classification-JEL: G11; G12; G14; G2; G24; G28; G32
Author-Name: Amir E. Khandani
Author-Name: Andrew W. Lo
Author-Person: plo171
Note: AP
Number: 14465
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14465
File-URL: http://www.nber.org/papers/w14465.pdf
File-Format: application/pdf
Publication-Status: published as Khandani, Amir E. & Lo, Andrew W., 2011. "What happened to the quants in August 2007? Evidence from factors and transactions data," Journal of Financial Markets, Elsevier, vol. 14(1), pages 1-46, February.
Abstract: During the week of August 6, 2007, a number of quantitative long/short equity hedge funds experienced unprecedented losses. It has been hypothesized that a coordinated deleveraging of similarly constructed portfolios caused this temporary dislocation in the market. Using the simulated returns of long/short equity portfolios based on five specific valuation factors, we find evidence that the unwinding of these portfolios began in July 2007 and continued until the end of 2007. Using transactions data, we find that the simulated returns of a simple marketmaking strategy were significantly negative during the week of August 6, 2007, but positive before and after, suggesting that the Quant Meltdown of August 2007 was the combined effects of portfolio deleveraging throughout July and the first week of August, and a temporary withdrawal of marketmaking risk capital starting August 8th. Our simulations point to two unwinds---a mini-unwind on August 1st starting at 10:45am and ending at 11:30am, and a more sustained unwind starting at the open on August 6th and ending at 1:00pm---that began with stocks in the financial sector and long Book-to-Market and short Earnings Momentum. These conjectures have significant implications for the systemic risks posed by the hedge-fund industry.
Handle: RePEc:nbr:nberwo:14465
Template-Type: ReDIF-Paper 1.0
Title: Effects of Welfare Reform on Educational Acquisition of Young Adult Women
Classification-JEL: H52; H53; I21; I28; I38; J18; J24
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Nancy E. Reichman
Author-Name: Hope Corman
Note: EH LS ED PE
Number: 14466
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14466
File-URL: http://www.nber.org/papers/w14466.pdf
File-Format: application/pdf
Publication-Status: published as Dhaval M. Dave, Hope Corman & Nancy E. Reichman, 2012. "Effects of Welfare Reform on Education Acquisition of Adult Women," Journal of Labor Research, vol. 33(2), pages 251-282.
Abstract: Education beyond traditional ages for schooling is an important source of human capital acquisition among adult women. Welfare reform, which began in the early 1990s and culminated in the passage of the Personal Responsibility and Work Opportunity Reconciliation Act in 1996, has promoted work rather than educational acquisition for this group. Exploiting variation in welfare reform across states and over time and using relevant comparison groups, we undertake a comprehensive study of the effects of welfare reform on adult women's educational acquisition. We first estimate effects of welfare reform on high school drop-out of teenage girls, both to improve on past research on this issue and to explore compositional changes that may be relevant for our primary analyses of the effects of welfare reform on the educational acquisition of adult women. We conduct numerous specification checks and explore the mediating role of work. We find robust and convincing evidence that welfare reform significantly decreased the probability of college enrollment among adult women, by at least 20 %. It also appears to have decreased the probability of high school enrollment on the same order of magnitude. These results suggest that the gains from welfare reform in terms of increases in employment and reductions in caseloads have come at a cost in terms of lower educational attainment among adult women at risk for relying on welfare.
Handle: RePEc:nbr:nberwo:14466
Template-Type: ReDIF-Paper 1.0
Title: The Experimental Approach to Development Economics
Classification-JEL: O1
Author-Name: Abhijit V. Banerjee
Author-Name: Esther Duflo
Author-Person: pdu166
Note: ED
Number: 14467
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14467
File-URL: http://www.nber.org/papers/w14467.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit V. Banerjee & Esther Duflo, 2009. "The Experimental Approach to Development Economics," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 151-178, 05.
Abstract: Randomized experiments have become a popular tool in development economics research, and have been the subject of a number of criticisms. This paper reviews the recent literature, and discusses the strengths and limitations of this approach in theory and in practice. We argue that the main virtue of randomized experiments is that, due to the close collaboration between researchers and implementers, they allow the estimation of parameters that it would not otherwise be possible to evaluate. We discuss the concerns that have been raised regarding experiments, and generally conclude that while they are real, they are often not specific to experiments. We conclude by discussing the relationship between theory and experiments.
Handle: RePEc:nbr:nberwo:14467
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of the U.S. Mortgage Default Crisis
Classification-JEL: D72; G21; L51
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: POL
Number: 14468
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14468
File-URL: http://www.nber.org/papers/w14468.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi & Francesco Trebbi, 2010. "The Political Economy of the US Mortgage Default Crisis," American Economic Review, American Economic Association, vol. 100(5), pages 1967-98, December.
Abstract: We examine the determinants of congressional voting behavior on two of the most significant pieces of federal legislation in U.S. economic history: the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Emergency Economic Stabilization Act of 2008. We find evidence that constituent interests and special interests influence voting patterns during the crisis. Representatives from districts experiencing an increase in mortgage default rates are significantly more likely to vote in favor of the AHRFPA. They are precise in responding only to mortgage related constituent defaults, and are significantly more sensitive to defaults of their own-party constituents. Increased campaign contributions from the financial services industry is associated with a higher likelihood of voting in favor of the EESA, a bill which transfers wealth from tax payers to the financial services industry. We also examine the trade-off between politician ideology and constituent and special interests, and find that conservative politicians are less responsive to constituent and special interest pressure. This latter finding suggests that politicians, through ideology, can commit against intervention even during severe crises.
Handle: RePEc:nbr:nberwo:14468
Template-Type: ReDIF-Paper 1.0
Title: Identification and Estimation of 'Irregular' Correlated Random Coefficient Models
Classification-JEL: C14; C23; I1; O1; O15
Author-Name: Bryan S. Graham
Author-Person: pgr95
Author-Name: James Powell
Note: EH LS PE TWP
Number: 14469
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14469
File-URL: http://www.nber.org/papers/w14469.pdf
File-Format: application/pdf
Publication-Status: published as Identification and Estimation of Average Partial Effects in “Irregular” Correlated Random Coefficient Panel Data Models Bryan S. Graham1, James L. Powell2,† Article first published online: 25 SEP 2012 DOI: 10.3982/ECTA8220 © 2012 The Econometric Society Issue Econometrica Econometrica Volume 80, Issue 5, pages 2105–2152, September 2012
Abstract: In this paper we study identification and estimation of a correlated random coefficients (CRC) panel data model. The outcome of interest varies linearly with a vector of endogenous regressors. The coefficients on these regressors are heterogenous across units and may covary with them. We consider the average partial effect (APE) of a small change in the regressor vector on the outcome (cf., Chamberlain, 1984; Wooldridge, 2005a). Chamberlain (1992) calculates the semiparametric efficiency bound for the APE in our model and proposes a √N consistent estimator. Nonsingularity of the APE's information bound, and hence the appropriateness of Chamberlain's (1992) estimator, requires (i) the time dimension of the panel (T) to strictly exceed the number of random coefficients (p) and (ii) strong conditions on the time series properties of the regressor vector. We demonstrate irregular identification of the APE when T = p and for more persistent regressor processes. Our approach exploits the different identifying information in the subpopulations of 'stayers' -- or units whose regressor values change little across periods -- and 'movers' -- or units whose regressor values change substantially across periods. We propose a feasible estimator based on our identification result and characterize its large sample properties. While irregularity precludes our estimator from attaining parametric rates of convergence, it limiting distribution is normal and inference is straightforward to conduct. Standard software may be used to compute point estimates and standard errors. We use our methods to estimate the average elasticity of calorie consumption with respect to total outlay for a sample of poor Nicaraguan households.
Handle: RePEc:nbr:nberwo:14469
Template-Type: ReDIF-Paper 1.0
Title: Are Mixed Neighborhoods Always Unstable? Two-Sided and One-Sided Tipping
Classification-JEL: H0; R2; R31
Author-Name: David Card
Author-Person: pca271
Author-Name: Alexandre Mas
Author-Person: pma2363
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: LS PE
Number: 14470
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14470
File-URL: http://www.nber.org/papers/w14470.pdf
File-Format: application/pdf
Abstract: A great deal of urban policy depends on the possibility of creating stable, economically and racially mixed neighborhoods. Many social interaction models - including the seminal Schelling (1971) model -- have the feature that the only stable equilibria are fully segregated. These models suggest that if home-buyers have preferences over their neighborhoods' racial composition, a neighborhood with mixed racial composition is inherently unstable, in the sense that a small change in the composition sets off a dynamic process that converges to either 0% or 100% minority share. Card, Mas, and Rothstein (2008) outline an alternative "one-sided" tipping model in which neighborhoods with a minority share below a critical threshold are potentially stable, but those that exceed the threshold rapidly shift to 100% minority composition. In this paper we examine the racial dynamics of Census tracts in major metropolitan areas over the period from 1970 to 2000, focusing on the question of whether tipping is "two-sided" or "one-sided". The evidence suggests that tipping behavior is one-sided, and that neighborhoods with minority shares below the tipping point attract both white and minority residents.
Handle: RePEc:nbr:nberwo:14470
Template-Type: ReDIF-Paper 1.0
Title: Mental Health Parity Legislation, Cost-Sharing and Substance Abuse Treatment Admissions
Classification-JEL: I11; I12; I18
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Swati Mukerjee
Note: EH
Number: 14471
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14471
File-URL: http://www.nber.org/papers/w14471.pdf
File-Format: application/pdf
Publication-Status: published as Dhaval Dave & Swati Mukerjee, 2011. "Mental health parity legislation, costâsharing and substanceâabuse treatment admissions," Health Economics, John Wiley & Sons, Ltd., vol. 20(2), pages 161-183, 02.
Abstract: Treatment is highly cost-effective in reducing an individual's substance abuse (SA) and associated harms. However, data from Treatment Episodes (TEDS) indicate that per capita treatment admissions substantially lagged behind increases in heavy drug use from 1992-2007. Only ten percent of individuals with clinical SA disorders receive any treatment, and almost half who forgo treatment point to accessibility and cost constraints as barriers to care. This study investigates the impact of state mental health and SA parity legislation on treatment admission flows and cost-sharing. Fixed effects specifications indicate that mandating comprehensive parity for mental health and SA disorders raises the probability that a treatment admission is privately insured, lowering costs for the individual. Despite some crowd-out of charity care for private insurance, mandates reduce the uninsured probability by a net 2.4 percentage points. States mandating comprehensive parity also see an increase in total treatment admissions. Thus, increasing cost-sharing and reducing financial barriers may aid the at-risk population in obtaining adequate SA treatment. Supply constraints mute effect sizes, suggesting that demand-focused interventions need to be complemented with policies supporting treatment providers. These results have implications for the effectiveness of the 2008 Federal Mental Health Parity and Addiction Equity Act in increasing SA treatment admissions and promoting cost-sharing.
Handle: RePEc:nbr:nberwo:14471
Template-Type: ReDIF-Paper 1.0
Title: Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas
Classification-JEL: H4; J3; Q51; Q54; R1
Author-Name: David Albouy
Author-Person: pal128
Note: EEE LS PE
Number: 14472
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14472
File-URL: http://www.nber.org/papers/w14472.pdf
File-Format: application/pdf
Abstract: The standard revealed-preference estimate of a city's quality of life is proportional to that city's cost-of-living relative to its wage-level. Adjusting estimates to account for federal taxes, non-housing costs, and non-labor income produces more plausible quality-of-life estimates than in the previous literature. Unlike previous estimates, adjusted quality-of-life measures successfully predict how housing costs rise with wage levels, are positively correlated with popular "livability" rankings and stated preferences, and do not decrease with city size. Mild seasons, sunshine, hills, and coastal proximity account for most inter-metropolitan quality-of-life differences. Amendments to quality-of-life measures for labor-market disequilibrium and household heterogeneity provide additional insights.
Handle: RePEc:nbr:nberwo:14472
Template-Type: ReDIF-Paper 1.0
Title: Carry Trades and Currency Crashes
Classification-JEL: E44; F3; F31; G12
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Stefan Nagel
Author-Person: pna176
Author-Name: Lasse H. Pedersen
Author-Person: ppe174
Note: AP EFG IFM ME
Number: 14473
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14473
File-URL: http://www.nber.org/papers/w14473.pdf
File-Format: application/pdf
Publication-Status: published as Carry Trades and Currency Crashes, Markus K. Brunnermeier, Stefan Nagel, Lasse H. Pedersen. in NBER Macroeconomics Annual 2008, Volume 23, Acemoglu, Rogoff, and Woodford. 2009
Abstract: This paper documents that carry traders are subject to crash risk: i.e. exchange rate movements between high-interest-rate and low-interest-rate currencies are negatively skewed. We argue that this negative skewness is due to sudden unwinding of carry trades, which tend to occur in periods in which risk appetite and funding liquidity decrease. Funding liquidity measures predict exchange rate movements, and controlling for liquidity helps explain the uncovered interest-rate puzzle. Carry-trade losses reduce future crash risk, but increase the price of crash risk. We also document excess co-movement among currencies with similar interest rate. Our findings are consistent with a model in which carry traders are subject to funding liquidity constraints.
Handle: RePEc:nbr:nberwo:14473
Template-Type: ReDIF-Paper 1.0
Title: Child Care Subsidies and Child Development
Classification-JEL: I18; I2; J13
Author-Name: Chris M. Herbst
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH ED EH
Number: 14474
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14474
File-URL: http://www.nber.org/papers/w14474.pdf
File-Format: application/pdf
Publication-Status: published as Herbst, Chris M. & Tekin, Erdal, 2010. "Child care subsidies and child development," Economics of Education Review, Elsevier, vol. 29(4), pages 618-638, August.
Abstract: Child care subsidies are an important part of federal and state efforts to move welfare recipients into employment. One of the criticisms of the current subsidy system, however, is that it overemphasizes work and does little to encourage parents to purchase high-quality child care. Consequently, there are reasons to be concerned about the implications of child care subsidies for child development. In this paper, we provide a systematic assessment of the impact of subsidy receipt on a wide range of child outcomes. Drawing on rich data from the Early Childhood Longitudinal Study, we document a negative relationship between child care subsidies and child development. In particular, our results suggest that subsidy receipt in the year before kindergarten lowers reading and math test scores and increases a variety of behavior problems at kindergarten entry. Some of these negative effects persist to the end of kindergarten. A tentative explanation for the poorer outcomes is that subsidized children are more likely to receive intense exposure to low-quality child care.
Handle: RePEc:nbr:nberwo:14474
Template-Type: ReDIF-Paper 1.0
Title: Peer Effects, Teacher Incentives, and the Impact of Tracking: Evidence from a Randomized Evaluation in Kenya
Classification-JEL: I20; O1
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Michael Kremer
Author-Person: pkr20
Note: CH ED
Number: 14475
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14475
File-URL: http://www.nber.org/papers/w14475.pdf
File-Format: application/pdf
Publication-Status: published as Esther Duflo & Pascaline Dupas & Michael Kremer, 2011. "Peer Effects, Teacher Incentives, and the Impact of Tracking: Evidence from a Randomized Evaluation in Kenya," American Economic Review, American Economic Association, vol. 101(5), pages 1739-74, August.
Abstract: To the extent that students benefit from high-achieving peers, tracking will help strong students and hurt weak ones. However, all students may benefit if tracking allows teachers to present material at a more appropriate level. Lower-achieving pupils are particularly likely to benefit from tracking if teachers would otherwise have incentives to teach to the top of the distribution. We propose a simple model nesting these effects. We compare 61 Kenyan schools in which students were randomly assigned to a first grade class with 60 in which students were assigned based on initial achievement. In non-tracking schools, students randomly assigned to academically stronger peers scored higher, consistent with a positive direct effect of academically strong peers. However, compared to their counterparts in non-tracking schools, students in tracking schools scored 0.14 standard deviations higher after 18 months, and this effect persisted one year after the program ended. Furthermore, students at all levels of the distribution benefited from tracking. Students near the median of the pre-test distribution benefited similarly whether assigned to the lower or upper section. A natural interpretation is that the direct effect of high-achieving peers is positive, but that tracking benefited lower-achieving pupils indirectly by allowing teachers to teach at a level more appropriate to them.
Handle: RePEc:nbr:nberwo:14475
Template-Type: ReDIF-Paper 1.0
Title: Why the European Securities Market is Not Fully Integrated
Classification-JEL: F3; F36; F59; G15; G2
Author-Name: Alberto Giovannini
Note: IFM
Number: 14476
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14476
File-URL: http://www.nber.org/papers/w14476.pdf
File-Format: application/pdf
Publication-Status: published as Why the European Securities Market Is Not Fully Integrated, Alberto Giovannini. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: I describe the challenge of fully integrating securities markets in Europe by integrating the clearing and settlement functionalities. The initial condition is characterized by a multitude of standards, conventions, regulation and laws, which are inconsistent with a barrier-free post-trading environment. In addition, the current providers of post-trading services are mostly for-profit monopolies. The EU reform strategy is discussed in detail, and its performance so far is assessed. I argue that the special features of the post-trading industry may help understand the disappointing progress so far.
Handle: RePEc:nbr:nberwo:14476
Template-Type: ReDIF-Paper 1.0
Title: Outsourcing when Investments are Specific and Complementary
Classification-JEL: D23; L14
Author-Name: Alla Lileeva
Author-Person: pli138
Author-Name: Johannes Van Biesebroeck
Author-Person: pva139
Note: IO PR
Number: 14477
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14477
File-URL: http://www.nber.org/papers/w14477.pdf
File-Format: application/pdf
Publication-Status: published as Alla Lileeva & Johannes Van Biesebroeck, 2013. "Outsourcing When Investments Are Specific And Interrelated," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 871-896, 08.
Abstract: Using the universe of large Canadian manufacturing firms in 1988 and 1996, we investigate to what extent outsourcing decision can be explained by a simple property rights model. The unique availability of disaggregate information on outputs as well as inputs permits the construction of a very detailed measure of vertical integration. We also construct five different measures of technological intensity to proxy for investments that are likely to be specific to a buyer-seller relationship. A theoretical model that allows for varying degrees of investment specificity and for complementarities---an externality between buyer and supplier investments---guides the analysis. Our main findings are that (i) greater specificity makes outsourcing less likely; (ii) complementarities between the investments of the buyer and the seller are also associated with less outsourcing; (iii) property rights predictions on the link between investment intensities and optimal ownership are only supported for transactions with low complementarities. High specificity and a low risk of appropriation strengthen the predictions in the model and in the data.
Handle: RePEc:nbr:nberwo:14477
Template-Type: ReDIF-Paper 1.0
Title: Inequality and Unemployment in a Global Economy
Classification-JEL: D31; F12; J31; J41; J64
Author-Name: Elhanan Helpman
Author-Person: phe205
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Stephen Redding
Author-Person: pre64
Note: ITI
Number: 14478
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14478
File-URL: http://www.nber.org/papers/w14478.pdf
File-Format: application/pdf
Publication-Status: published as Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2010. "Inequality and Unemployment in a Global Economy," Econometrica, Econometric Society, vol. 78(4), pages 1239-1283, 07.
Abstract: This paper develops a new framework for examining the distributional consequences of trade liberalization that is consistent with increasing inequality in every country, growth in residual wage inequality, rising unemployment, and reallocation within and between industries. While the opening of trade yields welfare gains, unemployment and inequality within sectors are higher in the trade equilibrium than in the closed economy. In the open economy changes in trade openness have nonmonotonic effects on unemployment and inequality within sectors. As aggregate unemployment and inequality have within- and between-sector components, changes in sector composition following the opening of trade complicate its impact on aggregate unemployment and inequality. However, when countries are nearly symmetric, the sectoral composition effects reinforce the within-sector effects, and both aggregate inequality and aggregate unemployment rise with trade liberalization.
Handle: RePEc:nbr:nberwo:14478
Template-Type: ReDIF-Paper 1.0
Title: The Euro and Structural Reforms
Classification-JEL: H10
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Silvia Ardagna
Author-Name: Vincenzo Galasso
Author-Person: pga29
Note: POL
Number: 14479
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14479
File-URL: http://www.nber.org/papers/w14479.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Silvia Ardagna & Vincenzo Galasso, 2011. "The Euro and Structural Reforms," Review of Economics and Institutions, Università di Perugia, Dipartimento Economia, Finanza e Statistica, vol. 2(1).
Publication-Status: published as The Euro and Structural Reforms, Alberto Alesina, Silvia Ardagna, Vincenzo Galasso. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: This paper investigates whether or not the adoption of the Euro has facilitated the introduction of structural reforms, defined as deregulation in the product markets and liberalization and deregulation in the labor markets. After reviewing the theoretical arguments that may link the adoption of the Euro and structural reforms, we investigate the empirical evidence. We find that the adoption of the Euro has been associated with an acceleration of the pace of structural reforms in the product market. The adoption of the Euro does not seem to have accelerated labor market reforms in the "primary labor market;" however, the run up to the Euro adoption seems to have been accompanied by wage moderation. We also investigate issues concerning the sequencing of goods and labor market reforms.
Handle: RePEc:nbr:nberwo:14479
Template-Type: ReDIF-Paper 1.0
Title: Self-Enforcing Stochastic Monitoring and the Separation of Debt and Equity Claims
Classification-JEL: G3
Author-Name: Harold L. Cole
Author-Person: pco70
Note: EFG
Number: 14480
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14480
File-URL: http://www.nber.org/papers/w14480.pdf
File-Format: application/pdf
Abstract: This paper studies the incentive issues associated with self-enforcing stochastic monitoring in a model of investment and production. The efficient contract features a debt-like payment with a threshold in terms of the reported output in which all of the reported output is taken up to the threshold if monitoring doesn't occur and all of the output is taken if monitoring does occur. An output report above the threshold leads to zero probability of monitoring and just the threshold amount being paid out. The efficiency gap between the self-enforcing contract and the commitment constraint is minimized when the monitors hold no part of the residual claim on the firm, which we associate with equity. Misreporting by the manager is an important component of the efficient contract.
Handle: RePEc:nbr:nberwo:14480
Template-Type: ReDIF-Paper 1.0
Title: Globalization and innovation in emerging markets
Classification-JEL: F23; M16; O16; P23
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Jan Svejnar
Author-Person: psv8
Author-Name: Katherine Terrell
Author-Person: pte51
Note: ITI PR
Number: 14481
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14481
File-URL: http://www.nber.org/papers/w14481.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Jan Svejnar & Katherine Terrell, 2010. "Globalization and Innovation in Emerging Markets," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 194-226, April.
Abstract: Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 emerging market economies, we estimate the effects of foreign competition, vertical linkages with foreign firms, and international trade on several types of innovation by domestic firms. Using instrumental variables and a battery of checks, we provide robust evidence of a positive relationship between foreign competition and innovation and show that the supply chain of multinational enterprises and international trade are also important channels. There is no evidence for an inverted U relationship between innovation and foreign competition. The relationship between globalization and innovation does not differ across the manufacturing and service sectors.
Handle: RePEc:nbr:nberwo:14481
Template-Type: ReDIF-Paper 1.0
Title: Child Health and Young Adult Outcomes
Classification-JEL: I1
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Mark Stabile
Author-Person: pst179
Author-Name: Phongsack Manivong
Author-Name: Leslie L. Roos
Note: CH EH LS PE
Number: 14482
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14482
File-URL: http://www.nber.org/papers/w14482.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Mark Stabile & Phongsack Manivong & Leslie L. Roos, 2010. "Child Health and Young Adult Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
Abstract: Previous research has shown a strong connection between birth weight and future child outcomes. But this research has not asked how insults to child health after birth affect long-term outcomes, whether health at birth matters primarily because it predicts future health or through some other mechanism, or whether health insults matter more at some key ages than at others? We address these questions using a unique data set based on public health insurance records for 50,000 children born between 1979 and 1987 in the Canadian province of Manitoba. These children are followed until 2006, and their records are linked to provincial registries with outcomes data. We compare children with health conditions to their own siblings born an average of 3 years apart, and control for health at birth. We find that health problems, and especially mental health problems in early childhood are significant determinants of outcomes linked to adult socioeconomic status.
Handle: RePEc:nbr:nberwo:14482
Template-Type: ReDIF-Paper 1.0
Title: Reality versus Propaganda in the Formation of Beliefs about Privatization
Classification-JEL: P16
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Ernesto Schargrodsky
Author-Person: psc348
Note: POL
Number: 14483
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14483
File-URL: http://www.nber.org/papers/w14483.pdf
File-Format: application/pdf
Publication-Status: published as Di Tella, Rafael & Galiani, Sebastian & Schargrodsky, Ernesto, 2012. "Reality versus propaganda in the formation of beliefs about privatization," Journal of Public Economics, Elsevier, vol. 96(5), pages 553-567.
Abstract: Argentina privatized most public utilities during the 1990's but re-nationalized the main water company in 2006. We study beliefs about the benefits of the privatization of water services amongst low and middle income groups immediately after the 2006 nationalization. Negative opinions about the privatization prevail. These are particularly strong amongst households that did not benefit from the privatization and amongst households that were reminded of the government's negative views about the privatization. A person's beliefs of the benefits of the water privatization were almost 30% more negative (relative to other privatizations) if his/her household did not gain access to water after the privatization. Similarly, a person's view of the water privatization (relative to other privatizations) was 16% more negative if he/she was read a vignette with some of the negative statements about the water privatization that Argentina's President expressed during the nationalization process. Interestingly, the effect of the vignette on households that gained water is insignificant, while it is largest (and significant) amongst households that did not gain water during the privatization. This suggests that propaganda was persuasive when it had a basis on reality.
Handle: RePEc:nbr:nberwo:14483
Template-Type: ReDIF-Paper 1.0
Title: Luddites and the Demographic Transition
Classification-JEL: J13; J24; N10; O31; O33
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Author-Name: Ahmed S. Rahman
Author-Person: pra268
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE
Number: 14484
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14484
File-URL: http://www.nber.org/papers/w14484.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Economic Growth December 2013, Volume 18, Issue 4, pp 373-409 Luddites, the industrial revolution, and the demographic transition Kevin Hjortshøj O’Rourke, Ahmed S. Rahman, Alan M. Taylor
Abstract: Technological change was unskilled-labor-biased during the early Industrial Revolution, but is skill-biased today. This is not embedded in extant unified growth models. We develop a model which can endogenously account for these facts, where factor bias reflects profit-maximizing decisions by innovators. Endowments dictate that the early Industrial Revolution be unskilled-labor-biased. Increasing basic knowledge causes a growth takeoff, an income-led demand for fewer educated children, and the transition to skill-biased technological change. The simulated model tracks British industrialization in the 18th and 19th centuries and generates a demographic transition without relying on either rising skill premia or exogenous educational supply shocks.
Handle: RePEc:nbr:nberwo:14484
Template-Type: ReDIF-Paper 1.0
Title: Can You Recognize an Effective Teacher When You Recruit One?
Classification-JEL: I21; J45
Author-Name: Jonah E. Rockoff
Author-Name: Brian A. Jacob
Author-Name: Thomas J. Kane
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: ED
Number: 14485
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14485
File-URL: http://www.nber.org/papers/w14485.pdf
File-Format: application/pdf
Publication-Status: published as Jonah E. Rockoff & Brian A. Jacob & Thomas J. Kane & Douglas O. Staiger, 2011. "Can You Recognize an Effective Teacher When You Recruit One?," Education Finance and Policy, MIT Press, vol. 6(1), pages 43-74, January.
Abstract: Research on the relationship between teachers' characteristics and teacher effectiveness has been underway for over a century, yet little progress has been made in linking teacher quality with factors observable at the time of hire. However, most research has examined a relatively small set of characteristics that are collected by school administrators in order to satisfy legal requirements and set salaries. To extend this literature, we administered an in-depth survey to new math teachers in New York City and collected information on a number of non-traditional predictors of effectiveness including teaching specific content knowledge, cognitive ability, personality traits, feelings of self-efficacy, and scores on a commercially available teacher selection instrument. Individually, we find that only a few of these predictors have statistically significant relationships with student and teacher outcomes. However, when all of these variables are combined into two primary factors summarizing cognitive and non-cognitive teacher skills, we find that both factors have a modest and statistically significant relationship with student and teacher outcomes, particularly with student test scores. These results suggest that, while there may be no single factor that can predict success in teaching, using a broad set of measures can help schools improve the quality of their teachers.
Handle: RePEc:nbr:nberwo:14485
Template-Type: ReDIF-Paper 1.0
Title: The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey
Classification-JEL: G3; L22
Author-Name: Renée Adams
Author-Person: pad158
Author-Name: Benjamin E. Hermalin
Author-Person: phe59
Author-Name: Michael S. Weisbach
Note: CF
Number: 14486
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14486
File-URL: http://www.nber.org/papers/w14486.pdf
File-Format: application/pdf
Publication-Status: published as Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
Abstract: This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Hermalin and Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards due to the joint endogeneity of makeup and actions. A focus of this survey is on how the literature, theoretical as well as empirically, deals - or on occasions fails to deal - with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance.
Handle: RePEc:nbr:nberwo:14486
Template-Type: ReDIF-Paper 1.0
Title: Storable Votes and Agenda Order Control. Theory and Experiments
Classification-JEL: C9; D02; D7; D8
Author-Name: Alessandra Casella
Author-Person: pca496
Note: PE POL
Number: 14487
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14487
File-URL: http://www.nber.org/papers/w14487.pdf
File-Format: application/pdf
Publication-Status: published as “Agenda Control as a Cheap Talk Game. Theory and Experiments with Storable Votes,” 2011, Games and Economic Behavior, 72: 46-76.
Abstract: The paper studies a voting scheme where members of a committee voting sequentially on a known series of binary proposals are each granted a single extra bonus vote to cast as desired - a streamlined version of Storable Votes. When the order of the agenda is exogenous, a simple sufficient condition guarantees the existence of welfare gains, relative to simple majority voting. But if one of the voters controls the order of the agenda, does the scheme become less efficient? The endogeneity of the agenda gives rise to a cheap talk game, where the chair can use the order of proposals to transmit information about his priorities. The game has multiple equilibria, differing systematically in the precision of the information transmitted. The chair can indeed benefit, but the aggregate welfare effects are of ambiguous sign and very small in all parameterizations studied. The theoretical conclusions are tested through laboratory experiments. Subjects have difficulty identifying the informative strategies, and tend to cast the bonus vote on their highest intensity proposal. As a result, realized payoffs are effectively identical to what they would be if the agenda were exogenous. The bonus vote matters; the chair's control of the agenda does not.
Handle: RePEc:nbr:nberwo:14487
Template-Type: ReDIF-Paper 1.0
Title: Capital Structure and Debt Structure
Classification-JEL: G21; G30; G32; M41
Author-Name: Joshua D. Rauh
Author-Name: Amir Sufi
Author-Person: psu303
Note: CF
Number: 14488
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14488
File-URL: http://www.nber.org/papers/w14488.pdf
File-Format: application/pdf
Publication-Status: published as Joshua D. Rauh & Amir Sufi, 2010. "Capital Structure and Debt Structure," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 23(12), pages 4242-4280, December.
Abstract: Using a novel data set that records individual debt issues on the balance sheet of a large random sample of rated public firms, we show that a recognition of debt heterogeneity leads to new insights into the determinants of corporate capital structure. We first demonstrate that traditional capital structure studies that ignore debt heterogeneity miss a substantial fraction of capital structure variation. We then show that relative to high credit quality firms, low credit quality firms are more likely to have a multi-tiered capital structure consisting of both secured bank debt with tight covenants and subordinated non-bank debt with loose covenants. Further, while high credit quality firms enjoy access to a variety of sources of discretionary flexible sources of finance, low credit quality firms rely on tightly monitored secured bank debt for liquidity. We discuss the extent to which these findings are consistent with existing theoretical models of debt structure in which firms simultaneously use multiple debt types to preserve manager and creditor incentives.
Handle: RePEc:nbr:nberwo:14488
Template-Type: ReDIF-Paper 1.0
Title: How Central Bankers See It: The First Decade of ECB Policy and Beyond
Classification-JEL: E42; E58
Author-Name: Stephen G. Cecchetti
Author-Person: pce4
Author-Name: Kermit L. Schoenholtz
Author-Person: psc677
Note: ME
Number: 14489
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14489
File-URL: http://www.nber.org/papers/w14489.pdf
File-Format: application/pdf
Abstract: In this history of the first decade of ECB policy, we also discuss key challenges for the next decade. Beyond the ECB's track record and an array of published critiques, our analysis relies on unique source material: extensive interviews with current and former ECB leaders and with other policymakers and scholars who viewed the evolution of the ECB from privileged vantage points. We share the assessment of our interviewees that the ECB has enjoyed many more successes than disappointments. These successes reflect both the ECB's design and implementation. Looking forward, we highlight the unique challenges posed by enlargement and, especially, by the euro area's complex arrangements for guarding financial stability. In the latter case, the key issues are coordination in a crisis and harmonization of procedures. As several interviewees suggested, in the absence of a new organizational structure for securing financial stability, the current one will need to function as if it were a single entity.
Handle: RePEc:nbr:nberwo:14489
Template-Type: ReDIF-Paper 1.0
Title: The Economic Consequences of the International Migration of Labor
Classification-JEL: F22; J61
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI LS
Number: 14490
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14490
File-URL: http://www.nber.org/papers/w14490.pdf
File-Format: application/pdf
Publication-Status: published as Gordon H. Hanson, 2009. "The Economic Consequences of the International Migration of Labor," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 179-208, 05.
Abstract: In this paper, I selectively discuss recent empirical work on the consequences of global labor mobility. I examine how international migration affects the incomes of individuals in sending and receiving countries and of migrants themselves. Were a social planner to choose the migration policies that would maximize global welfare, she would need to know, among other values, the elasticities of wages, prices, taxes, and government transfers with respect to national labor supplies, as well as how these parameters vary across countries. My goal is to evaluate the progress of the literature in terms of providing these inputs.
Handle: RePEc:nbr:nberwo:14490
Template-Type: ReDIF-Paper 1.0
Title: The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization
Classification-JEL: L2; M2; M52
Author-Name: Maria Guadalupe
Author-Person: pgu118
Author-Name: Julie Wulf
Note: IO ITI LS
Number: 14491
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14491
File-URL: http://www.nber.org/papers/w14491.pdf
File-Format: application/pdf
Publication-Status: published as Guadalupe, Maria, and Julie Wulf. 2010. "The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization on Corporate Hierarchies." American Economic Journal: Applied Economics, 2(4): 105-27. DOI: 10.1257/app.2.4.105
Abstract: This paper establishes a causal effect of competition from trade liberalization on various characteristics of organizational design. We exploit a unique panel dataset on firm hierarchies (1986-1999) of large U.S. firms and find that increasing competition leads firms to become flatter, i.e., (i) reduce the number of positions between the CEO and division managers (DM), (ii) increase the number of positions reporting directly to the CEO (span of control), (iii) increase DM total and performance-based pay. The results are generally consistent with the explanation that firms redesign their organizations through a set of complementary choices in response to changes in their environment.
Handle: RePEc:nbr:nberwo:14491
Template-Type: ReDIF-Paper 1.0
Title: Understanding Crude Oil Prices
Classification-JEL: Q3; Q4
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EEE
Number: 14492
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14492
File-URL: http://www.nber.org/papers/w14492.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton, 2009. "Understanding Crude Oil Prices," The Energy Journal, International Association for Energy Economics, vol. 30(2), pages 179-206.
Abstract: This paper examines the factors responsible for changes in crude oil prices. The paper reviews the statistical behavior of oil prices, relates these to the predictions of theory, and looks in detail at key features of petroleum demand and supply. Topics discussed include the role of commodity speculation, OPEC, and resource depletion. The paper concludes that although scarcity rent made a negligible contribution to the price of oil in 1997, it could now begin to play a role.
Handle: RePEc:nbr:nberwo:14492
Template-Type: ReDIF-Paper 1.0
Title: The Structure of Protection and Growth in the Late 19th Century
Classification-JEL: F13; F43; N10; N70; O49
Author-Name: Sibylle H. Lehmann
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Note: DAE ITI
Number: 14493
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14493
File-URL: http://www.nber.org/papers/w14493.pdf
File-Format: application/pdf
Publication-Status: published as May 2011, Vol. 93, No. 2, Pages 606-616 Posted Online April 26, 2011. (doi:10.1162/REST_a_00104) © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology The Structure of Protection and Growth in the Late Nineteenth Century Sibylle H. Lehmann Universität Köln Kevin H. O'Rourke
Abstract: Many papers have explored the relationship between average tariff rates and economic growth, when theory suggests that the structure of protection is what should matter. We therefore explore the relationship between economic growth and agricultural tariffs, industrial tariffs, and revenue tariffs, for a sample of relatively well-developed countries between 1875 and 1913. Industrial tariffs were positively correlated with growth. Agricultural tariffs were negatively correlated with growth, although the relationship was often statistically insignificant at conventional levels. There was no relationship between revenue tariffs and growth.
Handle: RePEc:nbr:nberwo:14493
Template-Type: ReDIF-Paper 1.0
Title: Taxing Corporate Income
Classification-JEL: G32; H25
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Michael P. Devereux
Author-Person: pde32
Author-Name: Helen Simpson
Author-Person: psi261
Note: PE
Number: 14494
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14494
File-URL: http://www.nber.org/papers/w14494.pdf
File-Format: application/pdf
Abstract: Following Meade (1978), we reconsider issues in the design of taxes on corporate income. We outline developments in economies and in economic thought over the last thirty years, and investigate how these developments should affect the design of taxes on corporate income. We consider a number of tax systems which have been proposed, distinguishing them in two main dimensions: the definition of what is to be taxed, and where it is to be taxed. We suggest that a tax levied on economic rent accruing in the corporate sector, and on a destination basis, merits serious consideration. We discuss alternative approaches, including both R-based and R+F-based flow-of-funds taxes and an ACE allowance. It is the destination basis -- with border adjustments for exports and imports -- which primarily distinguishes our suggestions from those of Meade (1978).
Handle: RePEc:nbr:nberwo:14494
Template-Type: ReDIF-Paper 1.0
Title: Adjusting to Trade Policy: Evidence from U.S. Antidumping Duties on Vietnamese Catfish
Classification-JEL: F13; F14
Author-Name: Irene Brambilla
Author-Name: Guido Porto
Author-Person: ppo196
Author-Name: Alessandro Tarozzi
Author-Person: pta112
Note: ITI
Number: 14495
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14495
File-URL: http://www.nber.org/papers/w14495.pdf
File-Format: application/pdf
Publication-Status: published as Irene Brambilla & Guido Porto & Alessandro Tarozzi, 2012. "Adjusting to Trade Policy: Evidence from U.S. Antidumping Duties on Vietnamese Catfish," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 304-319, 08.
Abstract: In 2003, after claims of dumping, the U.S. imposed heavy tariffs on imports of catfish from Vietnam. As a result, Vietnamese exports of catfish to the U.S. market sharply declined. Using a panel data of Vietnamese households, we explore the responses of catfish producers in the Mekong delta between 2002 and 2004. We study adjustments not only in catfish aquaculture but also in other economic activities. We find that, over this period, the rate of income growth was significantly lower among households relatively more involved in catfish farming in 2002. The source of this slower growth is explained by a relative decline in both catfish income and revenues from other miscellaneous farms activities such as poultry and livestock farming. Households did not adjust labor supply, most likely because of off-farm employment limitations. We also document that households more exposed to the shock reduced the share of investment assigned to catfish, while substituting into agriculture.
Handle: RePEc:nbr:nberwo:14495
Template-Type: ReDIF-Paper 1.0
Title: Taxes on Tax-Exempt Bonds
Classification-JEL: G12; G28; H20; H24
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Vineer Bhansali
Author-Name: Yuhang Xing
Author-Person: pxi126
Note: AP PE
Number: 14496
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14496
File-URL: http://www.nber.org/papers/w14496.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Ang & Vineer Bhansali & Yuhang Xing, 2010. "Taxes on Tax-Exempt Bonds," Journal of Finance, American Finance Association, vol. 65(2), pages 565-601, 04.
Abstract: Implicit tax rates priced in the cross section of municipal bonds are approximately two to three times as high as statutory income tax rates, with implicit tax rates close to 100% using retail trades and above 70% for interdealer trades. These implied tax rates can be identified on the cross section of municipal bonds because a portion of secondary market municipal bond trades involve income taxes. After valuing the tax payments, market discount bonds, which carry income tax liabilities, trade at yields around 25 basis points higher than comparable municipal bonds not subject to any taxes. The high sensitivities of municipal bond prices to tax rates can be traced to individual retail traders dominating dealers and other institutions.
Handle: RePEc:nbr:nberwo:14496
Template-Type: ReDIF-Paper 1.0
Title: China and the Manufacturing Exports of Other Developing Countries
Classification-JEL: F15
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Raymond Robertson
Author-Person: pro310
Note: ITI
Number: 14497
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14497
File-URL: http://www.nber.org/papers/w14497.pdf
File-Format: application/pdf
Publication-Status: published as China and the Manufacturing Exports of Other Developing Countries, Gordon H. Hanson, Raymond Robertson. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: In this paper, we examine the impact of China's growth on developing countries that specialize in manufacturing. Over 2000-2005, manufacturing accounted for 32% of China's GDP and 89% of its merchandise exports, making it more specialized in the sector than any other large developing economy. Using the gravity model of trade, we decompose bilateral trade into components associated with demand conditions in importing countries, supply conditions in exporting countries, and bilateral trade costs. We identify 10 developing economies for which manufacturing represents more than 75% of merchandise exports (Hungary, Malaysia, Mexico, Pakistan, the Philippines, Poland, Romania, Sri Lanka, Thailand, and Turkey), which are in theory the countries most exposed to the adverse consequences of China's export growth. Our results suggest that had China's export supply capacity been constant over the 1995-2005 period, demand for exports would have been 0.8% to 1.6% higher in the 10 countries studied. Thus, even for the developing countries most specialized in export manufacturing, China's expansion has represented only a modest negative shock.
Handle: RePEc:nbr:nberwo:14497
Template-Type: ReDIF-Paper 1.0
Title: The Future of American Fertility
Classification-JEL: H0; H55; J11; J13
Author-Name: Samuel H. Preston
Author-Name: Caroline Sten Hartnett
Note: AG CH
Number: 14498
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14498
File-URL: http://www.nber.org/papers/w14498.pdf
File-Format: application/pdf
Publication-Status: published as The Future of American Fertility, Samuel H. Preston, Caroline Sten Hartnett. in Demography and the Economy, Shoven. 2011
Abstract: This paper reviews the major social and demographic forces influencing American fertility levels with the aim of predicting changes during the next three decades. Increases in the Hispanic population and in educational attainment are expected to have modest and offsetting effects on fertility levels. A cessation of the recent pattern of increasing ages at childbearing will at some point put upward pressure on period (but not cohort) fertility rates. Higher relative wages for women and better contraception have empowered women and fundamentally altered marriage and relations between the sexes. But women's childbearing has become less dependent upon stable relations with men, and educational differences in intended fertility have narrowed. One explanation of higher fertility in the U.S. than in other developed countries is that its institutions have adapted better to rising relative wages for women and the attendant increase in women's labor force participation.
Handle: RePEc:nbr:nberwo:14498
Template-Type: ReDIF-Paper 1.0
Title: Understanding PPPs and PPP-based national accounts
Classification-JEL: E01; N1; O47
Author-Name: Angus Deaton
Author-Person: pde30
Author-Name: Alan Heston
Author-Person: phe660
Note: EFG
Number: 14499
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14499
File-URL: http://www.nber.org/papers/w14499.pdf
File-Format: application/pdf
Publication-Status: published as Angus Deaton & Alan Heston, 2010. "Understanding PPPs and PPP-Based National Accounts," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 1-35, October.
Abstract: PPP-based national accounts have become an important part of the database for macroeconomists, development economists, and economic historians. Frequently used global data come from the Penn World Table (PWT) and the World Bank's World Development Indicators; a substantial fraction of the world is also covered in the PPP accounts produced by the OECD and the European Union. This paper provides an overview of how these data are constructed, and discusses both the theory and the practical problems of implementing it. All of these data are underpinned by the International Comparison Program (ICP), which collects data on prices worldwide. The most recent round of the ICP was for 2005 with final results published in early 2008; version 7.0 of the Penn World Table will soon incorporate these results. The 2005 ICP, like earlier rounds, involved substantial revisions to previous data, most notably revising downwards the size of the Chinese (40 percent smaller) and Indian (36 percent) economies. We discuss the reasons for the revisions, and assess their plausibility. We focus on four important areas: how to handle international differences in quality, the treatment of urban and rural areas of large countries such as China, India, and Brazil, how to estimate prices for government services, health, and education, and the effects of the regional structure of the ICP. All of these affect the interpretation of previous data, as well as the current revisions. We discuss previous revisions of the PWT, and their effects on various kinds of econometric analysis. The paper concludes with health warnings that should be kept in mind when using these data, which are not always suitable for the purposes to which they are put. Some international comparisons are close to impossible, even in theory, and in others, the practical difficulties make comparison exceedingly hazardous.
Handle: RePEc:nbr:nberwo:14499
Template-Type: ReDIF-Paper 1.0
Title: Price Momentum In Stocks: Insights From Victorian Age Data
Classification-JEL: G1; G12; G14
Author-Name: Benjamin Chabot
Author-Person: pch1553
Author-Name: Eric Ghysels
Author-Person: pgh7
Author-Name: Ravi Jagannathan
Author-Person: pja91
Note: AP
Number: 14500
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14500
File-URL: http://www.nber.org/papers/w14500.pdf
File-Format: application/pdf
Abstract: We find that price momentum in stocks was a pervasive phenomenon during the Victorian age (1866-1907) as well. Momentum strategy profits have little systematic risk even at business cycle frequencies; disappear periodically only to reappear later; exhibit long run reversal; and are higher following up markets, suggesting limited availability of arbitrage capital relative to opportunities during those times. Since there were no capital gains taxes during the Victorian age, the long run reversal of momentum profits must have a fundamental component, that is unrelated to tax based trading, identified by Grinblatt and Moskowitz (2004) using CRSP era data.
Handle: RePEc:nbr:nberwo:14500
Template-Type: ReDIF-Paper 1.0
Title: Contracts as Reference Points - Experimental Evidence
Classification-JEL: D0; K0; C9
Author-Name: Ernst Fehr
Author-Person: pfe29
Author-Name: Oliver D. Hart
Author-Person: pha222
Author-Name: Christian Zehnder
Author-Person: pze32
Note: CF LE
Number: 14501
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14501
File-URL: http://www.nber.org/papers/w14501.pdf
File-Format: application/pdf
Publication-Status: published as Ernst Fehr & Oliver Hart & Christian Zehnder, 2009. "Contracts, Reference Points, and Competition-Behavioral Effects of The Fundamental Transformation," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 561-572, 04-05.
Publication-Status: published as Ernst Fehr & Oliver Hart & Christian Zehnder, 2011. "Contracts as Reference Points--Experimental Evidence," American Economic Review, American Economic Association, vol. 101(2), pages 493-525, April.
Abstract: In a recent paper, Hart and Moore (2008) introduce new behavioral assumptions that can explain long-term contracts and important aspects of the employment relation. However, so far there exists no direct evidence that supports these assumptions and, in particular, Hart and Moore's notion that contracts provide reference points. In this paper, we examine experimentally the behavioral forces stipulated in their theory. The evidence confirms the model's prediction that there is a tradeoff between rigidity and flexibility in a trading environment with incomplete contracts and ex ante uncertainty about the state of nature. Flexible contracts - which would dominate rigid contracts under standard assumptions - cause a significant amount of shading on ex post performance, while under rigid contracts, much less shading occurs. Thus, although rigid contracts rule out trading in some states of the world, parties frequently implement them. While our results are broadly consistent with established behavioral concepts, they cannot easily be explained by existing theories. The experiment appears to reveal a new behavioral force: ex ante competition legitimizes the terms of a contract, and aggrievement and shading occur mainly about outcomes within the contract.
Handle: RePEc:nbr:nberwo:14501
Template-Type: ReDIF-Paper 1.0
Title: On the Sorting of Physicians across Medical Occupations
Classification-JEL: D82; I10; J31; J33; L23
Author-Name: Pascal Courty
Author-Name: Gerald R. Marschke
Author-Person: pma293
Note: LS
Number: 14502
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14502
File-URL: http://www.nber.org/papers/w14502.pdf
File-Format: application/pdf
Abstract: We model the sorting of medical students across medical occupations and identify a mechanism that explains the possibility of differential productivity across occupations. The model combines moral hazard and matching of physicians and occupations with pre-matching investments. In equilibrium assortative matching takes place; more able physicians join occupations less exposed to moral hazard risk, face more powerful performance incentives, and are more productive. Under-consumption of health services relative to the first best allocation increases with occupational (moral hazard) risk. Occupations with risk above a given threshold are not viable. The model offers an explanation for the persistence of distortions in the mix of health care services offered the differential impact of malpractice risk across occupations, and the recent growth in medical specialization.
Handle: RePEc:nbr:nberwo:14502
Template-Type: ReDIF-Paper 1.0
Title: Tracing the Woes: An Empirical Analysis of the Airline Industry
Classification-JEL: L0; L1; L13; L91; L93
Author-Name: Steven Berry
Author-Person: pbe18
Author-Name: Panle Jia
Author-Person: pji114
Note: IO
Number: 14503
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14503
File-URL: http://www.nber.org/papers/w14503.pdf
File-Format: application/pdf
Publication-Status: published as Steven Berry & Panle Jia, 2010. "Tracing the Woes: An Empirical Analysis of the Airline Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 1-43, August.
Abstract: The U.S. airline industry went through tremendous turmoil in the early 2000's. There were four major bankruptcies and two major mergers, with all legacy carriers reporting a large profit reduction. This paper presents a structural model of the airline industry, and estimates the impact of demand and supply changes on profitability. We find that, compared with the late 1990s, in 2006, a) air-travel demand was 8% more price sensitive; b) passengers displayed a strong preference for direct flights, and the connection semi-elasticity was 17% higher; c) the changes of marginal cost significantly favored direct flights. These findings are present in all the specifications we estimated. Together with the expansion of low cost carriers, they explained more than 80% of the decrease in legacy carriers' variable profits.
Handle: RePEc:nbr:nberwo:14503
Template-Type: ReDIF-Paper 1.0
Title: Sacred Cars? Optimal Regulation of Stationary and Non-stationary Pollution Sources
Classification-JEL: Q52; Q58
Author-Name: Meredith Fowlie
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Catherine Wolfram
Note: EEE IO
Number: 14504
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14504
File-URL: http://www.nber.org/papers/w14504.pdf
File-Format: application/pdf
Publication-Status: published as American economic journal : a journal of the American Economic Association.- Nashville, Tenn. : AEA, ISSN 1945-7731, ZDB-ID 24423828. - Vol. 4.2012, 1, p. 98-126
Abstract: For political and practical reasons, environmental regulations sometimes treat point source polluters, such as power plants, differently from mobile source polluters, such as vehicles. This paper measures the extent of this regulatory asymmetry in the case of nitrogen oxides (NOx), the criteria air pollutant that has proven to be the most recalcitrant in the United States. We find significant differences in marginal abatement costs across source types with the marginal cost of reducing NOx from cars less than half of the marginal cost of reducing NOx from power plants. Our findings have important implications for the efficiency of NOx emissions reductions and, more broadly, the benefits from increasing the sectoral scope of environmental regulation. We estimate that the costs of achieving the desired emissions reductions could have been reduced by nearly $2 billion, or 9 percent of program costs, had marginal abatement costs been equated across source types.
Handle: RePEc:nbr:nberwo:14504
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Price Dynamics in Perishable Goods Markets: The Case of Secondary Markets for Major League Baseball Tickets
Classification-JEL: L11; L81
Author-Name: Andrew Sweeting
Author-Person: psw53
Note: IO
Number: 14505
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14505
File-URL: http://www.nber.org/papers/w14505.pdf
File-Format: application/pdf
Abstract: This paper analyzes the dynamics of prices in two online secondary markets for Major League Baseball tickets. Controlling for ticket quality, prices tend to decline significantly as a game approaches. The paper describes and tests alternative theoretical explanations for why this happens in equilibrium, considering the problems of both buyers and sellers. It shows that sellers cut prices (either fixed prices or reserve prices in auctions) because of declining opportunity costs of holding onto tickets as their future selling opportunities disappear. Even though prices can be expected to fall, the majority of observed early purchases can be rationalized by plausible ticket valuations and return to market costs given product differentiation and uncertainties about ticket availability.
Handle: RePEc:nbr:nberwo:14505
Template-Type: ReDIF-Paper 1.0
Title: The Strategic Timing Incentives of Commercial Radio Stations: An Empirical Analysis Using Multiple Equilibria
Classification-JEL: C35; C72; L13; L82
Author-Name: Andrew Sweeting
Author-Person: psw53
Note: IO
Number: 14506
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14506
File-URL: http://www.nber.org/papers/w14506.pdf
File-Format: application/pdf
Publication-Status: published as The strategic timing incentives of commercial radio stations: An empirical analysis using multiple equilibria Andrew Sweeting Article first published online: 12 OCT 2009 DOI: 10.1111/j.1756-2171.2009.00086.x © 2009, RAND Issue The RAND Journal of Economics The RAND Journal of Economics Volume 40, Issue 4, pages 710–742, Winter 2009
Abstract: Commercial radio stations and advertisers have potentially conflicting interests about when commercial breaks should be played. This paper estimates an incomplete information timing game to examine stations' equilibrium timing incentives. It shows how identification can be aided by the existence of multiple equilibria when appropriate data are available. It finds that stations want to play their commercials at the same time, suggesting that mechanisms exist which align the incentives of stations with the interests of advertisers. It also shows that coordination incentives are much stronger during drivetime hours, when more listeners switch stations, and in smaller markets.
Handle: RePEc:nbr:nberwo:14506
Template-Type: ReDIF-Paper 1.0
Title: Life Satisfaction and Quality of Development
Classification-JEL: D6; I3; J1; O1; O10; P51
Author-Name: John F. Helliwell
Author-Person: phe368
Note: IFM
Number: 14507
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14507
File-URL: http://www.nber.org/papers/w14507.pdf
File-Format: application/pdf
Abstract: This paper argues that measures of life satisfaction, now being collected annually by the Gallup World Poll in more than 130 countries, permit a much broader view of the quality and consequences of development than other common measures. While these data show the importance of conventionally measured economic development, they also show the importance of many other elements of life that are also affected, whether deliberately or not, by community, national, and international institutions and policies. In estimating the importance of these other factors, this paper pays special attention to the social context of well-being: the norms, networks and relationships within which lives are lived.
Handle: RePEc:nbr:nberwo:14507
Template-Type: ReDIF-Paper 1.0
Title: Self-Esteem, Moral Capital, and Wrongdoing
Classification-JEL: D83; K4; Z1
Author-Name: Ernesto Dal Bó
Author-Person: pda416
Author-Name: Marko Terviö
Note: LE POL
Number: 14508
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14508
File-URL: http://www.nber.org/papers/w14508.pdf
File-Format: application/pdf
Publication-Status: published as SELF-ESTEEM, MORAL CAPITAL, AND WRONGDOING Ernesto Dal Bó1, Marko Terviö2 Article first published online: 3 JUN 2013 DOI: 10.1111/jeea.12012 © 2013 by the European Economic Association Issue Journal of the European Economic Association Journal of the European Economic Association Themed Issue: Social Norms: Theory and Evidence from Laboratory and Field Volume 11, Issue 3, pages 599–663, June 2013
Abstract: We present an infinite-horizon model of moral standards where self-esteem and unconscious drives play key roles. In the model, an individual receives random temptations (such as bribe offers) and must decide which to resist. Individual actions depend both on conscious intent and a type reflecting unconscious drives. Temptations yield consumption value, but keeping a good self-image (a high belief of being the type of person that resists) yields self-esteem. We identify conditions for individuals to build an introspective reputation for goodness ("moral capital") and for good actions to lead to a stronger disposition to do good. Bad actions destroy moral capital and lock-in further wrongdoing. Economic shocks that result in higher temptations have persistent effects on wrongdoing that fade only as new generations replace the shocked cohorts. Small parametric differences across societies may lead to large wrongdoing differentials, and societies with the same moral fundamentals may display different wrongdoing rates depending on how much past luck has polarized the distribution of individual beliefs. The model illustrates how optimal deterrence may change under endogenous moral costs and how wrongdoing may be compounded as high temptation activities attract individuals with low moral capital.
Handle: RePEc:nbr:nberwo:14508
Template-Type: ReDIF-Paper 1.0
Title: An Exploration of the Japanese Slowdown during the 1990s
Classification-JEL: E3
Author-Name: Diego A. Comin
Author-Person: pco55
Note: EFG ITI ME PR
Number: 14509
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14509
File-URL: http://www.nber.org/papers/w14509.pdf
File-Format: application/pdf
Publication-Status: published as Comin, Diego A. "An Exploration of the Japanese Slowdown during the 1990s." In Japan's Bubble, Deflation, and Long-term Stagnation, edited by Koichi Hamada, Anil Kashyap, and David Weinstein. MIT Press, 2011.
Abstract: Why did the Japanese slowdown of the 90s last so long if none of the shocks that hit the Japanese economy had a comparable persistence? In this paper, I use the Comin and Gertler (2006) model of medium term fluctuations to explore whether their endogenous technology mechanisms can amplify and propagate the wage markup fluctuations observed in Japan over the early 90s to drive a Japanese productivity slowdown. The model can reproduce the observed decline, relative to trend of R&D expenditures and the slowdown in the diffusion of new technologies. This slowdown in the development and adoption of new technologies constitutes a powerful propagation mechanism. As a result, the model does a good job in reproducing the evolution of output, consumption, investment, TFP and hours worked in Japan during the "lost decade", specially up to 1998. During the last two years of the decade, the propagation mechanisms in the model seem to run out of steam, while the Japanese economy continued to deteriorate.
Handle: RePEc:nbr:nberwo:14509
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Trade-Offs in an Estimated Open-Economy DSGE Model
Classification-JEL: E52; E58; F33; F41
Author-Name: Malin Adolfson
Author-Person: pad42
Author-Name: Stefan Laséen
Author-Person: pla257
Author-Name: Jesper Lindé
Author-Person: pli302
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: EFG IFM ME
Number: 14510
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14510
File-URL: http://www.nber.org/papers/w14510.pdf
File-Format: application/pdf
Publication-Status: published as Adolfson, Malin & Laséen, Stefan & Lindé, Jesper & Svensson, Lars E.O., 2014. "Monetary policy trade-offs in an estimated open-economy DSGE model," Journal of Economic Dynamics and Control, Elsevier, vol. 42(C), pages 33-49.
Abstract: This paper studies the transmission of shocks and the trade-offs between stabilizing CPI inflation and alternative measures of the output gap in Ramses, the Riksbank's empirical dynamic stochastic general equilibrium (DSGE) model of a small open economy. The main results are, first, that the transmission of shocks depends substantially on the conduct of monetary policy, and second, that the trade-off between stabilizing CPI inflation and the output gap strongly depends on which concept of potential output in the output gap between output and potential output is used in the loss function. If potential output is defined as a smooth trend this trade-off is much more pronounced compared to the case when potential output is defined as the output level that would prevail if prices and wages were flexible.
Handle: RePEc:nbr:nberwo:14510
Template-Type: ReDIF-Paper 1.0
Title: Term Length and Political Performance
Classification-JEL: H1
Author-Name: Ernesto Dal Bó
Author-Person: pda416
Author-Name: Martín Rossi
Author-Person: pro457
Note: POL
Number: 14511
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14511
File-URL: http://www.nber.org/papers/w14511.pdf
File-Format: application/pdf
Publication-Status: published as Term Length and The Effort of Politicians, Review of Economic Studies 78(4), October 2011, (with Martín Rossi)
Abstract: We evaluate the effects of the duration of legislative terms on the performance of legislators. We exploit a natural experiment in the Argentine House of Representatives where term lengths were assigned randomly. Results for various objective measures of legislative output show that longer terms enhance legislative performance. We use a second experiment in the Argentine Senate to determine whether our results are specific to a particular chamber and a particular time. The results from the Senate reinforce the idea that longer terms enhance legislative productivity. Our results highlight limits to classic theories of electoral discipline (Barro 1973, Ferejohn 1986) predicting that shorter terms, by tightening accountability, will incentivize hard work by politicians. We discuss and test possible explanations. Our results suggest that the "accountability logic" is overcome by an "investment logic."
Handle: RePEc:nbr:nberwo:14511
Template-Type: ReDIF-Paper 1.0
Title: Tobit at Fifty: A Brief History of Tobin's Remarkable Estimator, of Related Empirical Methods, and of Limited Dependent Variable Econometrics in Health Economics
Classification-JEL: I1
Author-Name: Kohei Enami
Author-Name: John Mullahy
Note: EH
Number: 14512
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14512
File-URL: http://www.nber.org/papers/w14512.pdf
File-Format: application/pdf
Publication-Status: published as Kohei Enami & John Mullahy, 2009. "Tobit at fifty: a brief history of Tobin's remarkable estimator, of related empirical methods, and of limited dependent variable econometrics in health economics," Health Economics, John Wiley & Sons, Ltd., vol. 18(6), pages 619-628.
Abstract: Practitioners of empirical health economics might be forgiven for paying little heed to the recent 50th anniversary of the publication of one of the most important papers in its methodological heritage: James Tobin's widely-cited 1958 Econometrica paper that developed what later became known as the Tobit estimator. This golden anniversary milestone provides a fitting opportunity to reflect on Tobin's contribution and to assess the role that econometric limited dependent variable modeling has played in empirical health economics. Of primary focus here is how Tobin's estimator came to be and came to take root in empirical health economics. The paper provides a brief history of Tobin's estimator and related methods up through about 1971, discusses the early applications of Tobit and related estimators in health economics, i.e. the "technology diffusion" of Tobit in health economics, and offers some concluding remarks.
Handle: RePEc:nbr:nberwo:14512
Template-Type: ReDIF-Paper 1.0
Title: No Time to Lose? Time Constraints and Physical Activity
Classification-JEL: I1
Author-Name: John Mullahy
Author-Name: Stephanie A. Robert
Note: EH
Number: 14513
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14513
File-URL: http://www.nber.org/papers/w14513.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economics of the Household December 2010, Volume 8, Issue 4, pp 409-432 No time to lose: time constraints and physical activity in the production of health John Mullahy, Stephanie A. Robert
Abstract: Although individuals are all endowed with the same time budgets, time use patterns differ owing to heterogeneity in preferences and constraints. In today's health policy arena there is considerable discussion about how to improve health outcomes by increasing levels of physical activity. In this paper, we explore how individuals endowed with different levels of human capital allocate time to physically-demanding activities that we characterize as health-producing behaviors. Our data are drawn from multiple years of the American Time Use Survey (ATUS), which are based on daily time use diaries and include information on detailed physical activity time uses. Since ATUS time use categories are mutually exclusive and exhaustive -- i.e. "multitasking" is not accommodated -- we employ a novel econometric share equation techniques to enforce the adding-up requirement that time use is constrained to 1,440 minutes per day. We find that differential human capital endowments result in different manifestations of how time is used to produce health. While more-educated individuals, e.g., sleep much less than less-educated individuals, they utilize some of the time so liberated to exercise and work more. We find as well that various features of individuals' environments, broadly defined, play important roles in time allocation decisions.
Handle: RePEc:nbr:nberwo:14513
Template-Type: ReDIF-Paper 1.0
Title: A Depressing Scenario: Mortgage Debt Becomes Unemployment Insurance
Classification-JEL: E24; H21; J22
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG ME PE
Number: 14514
Creation-Date: 2008-11
Order-URL: http://www.nber.org/papers/w14514
File-URL: http://www.nber.org/papers/w14514.pdf
File-Format: application/pdf
Abstract: When asset values fall, the owners of collateralized loans are not in an enviable position. Nonetheless, they possess a kind of monopoly power over their borrowers that they do not possess when borrowers are solvent. Lenders maximize profits by price discriminating, but create deadweight costs in the process. From the perspective of the aggregate labor market, it is as if lenders were levying their own labor income tax, on top of the taxes already levied by public treasuries. Governments have an incentive to regulate this price discrimination, repudiate part of the private debts, cut their own tax rates, or acquire the debt themselves. These conditions may describe both the 1930s and economic events today.
Handle: RePEc:nbr:nberwo:14514
Template-Type: ReDIF-Paper 1.0
Title: Physical Capital, Knowledge Capital and the Choice Between FDI and Outsourcing
Classification-JEL: F2; F23; L2; L22; L24
Author-Name: Yongmin Chen
Author-Person: pch420
Author-Name: Ignatius J. Horstmann
Author-Person: pho167
Author-Name: James R. Markusen
Author-Person: pma528
Note: IO ITI
Number: 14515
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14515
File-URL: http://www.nber.org/papers/w14515.pdf
File-Format: application/pdf
Publication-Status: published as Yongmin Chen & Ignatius J. Horstmann & James R. Markusen, 2012. "Physical capital, knowledge capital, and the choice between FDI and outsourcing," Canadian Journal of Economics/Revue canadienne d'économique, vol 45(1), pages 1-15.
Abstract: There exist two approaches in the literature concerning the multinational firm's mode choice for foreign production between an owned subsidiary and a licensing contract. One approach considers environments where the firm is transferring primarily knowledge-based assets. An important assumption there is that the relevant knowledge is absorbed by the local manager or licensee over the course of time: knowledge is non-excludable. More recently, a number of influential papers have adopted a property-right view of the firm, assuming the application abroad of physical capital, the owner of which retains full and exclusive rights to the capital should a relationship break down. In this paper we combine both forms of capital assets in a single model. The model predicts that foreign direct investment (owned subsidiaries) is more likely than licensing when the ratio of knowledge capital to physical capital is high, or when market value is high relative to the book value of capital (high Tobin's-Q).
Handle: RePEc:nbr:nberwo:14515
Template-Type: ReDIF-Paper 1.0
Title: The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design
Classification-JEL: C23; H21; H41; H71; H75; I22; R13
Author-Name: Stephanie Riegg Cellini
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: ED LS PE
Number: 14516
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14516
File-URL: http://www.nber.org/papers/w14516.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2010) 125 (1): 215-261. doi: 10.1162/qjec.2010.125.1.215
Abstract: This paper analyzes the impact of voter-approved school bond issues on school district balance sheets, local housing prices, and student achievement. We draw on the unique characteristics of California's system of school finance to obtain clean identification of bonds' causal effects, comparing districts in which school bond referenda passed or failed by narrow margins. We extend the traditional regression discontinuity (RD) design to account for the dynamic nature of bond referenda, since the probability of future proposals depends on the outcomes of past elections. By law, bond revenues can be used only for school facilities projects. We find that bond funds indeed stick exclusively in the capital account, with no effect on current expenditures or other revenues. Our housing market estimates indicate that California school districts under-invest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness-to-pay on the part of marginal homebuyers of $1.50 or more for each $1 of facility spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the school bond impact on test scores cannot explain more than a small portion of the total housing price effect. Our estimates indicate that parents value improvements in other dimensions of school output (e.g., safety) that may be not captured by test scores.
Handle: RePEc:nbr:nberwo:14516
Template-Type: ReDIF-Paper 1.0
Title: Intermediary Asset Pricing
Classification-JEL: G01; G2; G28
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: CF AP
Number: 14517
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14517
File-URL: http://www.nber.org/papers/w14517.pdf
File-Format: application/pdf
Publication-Status: published as He, Zhiguo, and Arvind Krishnamurthy. 2013. "Intermediary Asset Pricing." American Economic Review, 103(2): 732-70. DOI: 10.1257/aer.103.2.732
Abstract: We present a model to study the dynamics of risk premia during crises in asset markets where the marginal investor is a financial intermediary. Intermediaries face a constraint on raising equity capital. When the constraint binds, so that intermediaries' equity capital is scarce, risk premia rise to reflect the capital scarcity. We calibrate the model and show that it does well in matching two aspects of crises: the nonlinearity of risk premia during crisis episodes; and, the speed of adjustment in risk premia from a cri- sis back to pre-crisis levels. We use the model to quantitatively evaluate the effectiveness of a variety of central bank policies, including reducing intermediaries' borrowing costs, infusing equity capital, and directly intervening in distressed asset markets. All of these policies are effective in aiding the recovery from a crisis. Infusing equity capital into intermediaries is particularly effective because it attacks the equity capital constraint that is at the root of the crisis in our model.
Handle: RePEc:nbr:nberwo:14517
Template-Type: ReDIF-Paper 1.0
Title: Did Mergers Help Japanese Mega-Banks Avoid Failure? Analysis of the Distance to Default of Banks
Classification-JEL: G19; G21
Author-Name: Kimie Harada
Author-Name: Takatoshi Ito
Note: IFM
Number: 14518
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14518
File-URL: http://www.nber.org/papers/w14518.pdf
File-Format: application/pdf
Publication-Status: published as Harada, Kimie & Ito, Takatoshi, 2011. "Did mergers help Japanese mega-banks avoid failure? Analysis of the distance to default of banks," Journal of the Japanese and International Economies, Elsevier, vol. 25(1), pages 1-22, March.
Abstract: In the late 1990s, several large Japanese banks failed for the first time in its postwar history. As the financial environment was deteriorating further, several remaining banks decided to merge among themselves, presumably, to make their operations more efficient to avoid failures. This paper defines, calculates and analyzes the distance to default (DD), a concept of credit risk in corporate finance, of Japanese large banks. The DD helps us to answer a question whether mergers in the late 1990s and 2000s made the merged banks financially more robust as intended. The novelty of the paper is to develop a method of analyzing the DD for banks that experience a merger, and to apply the method to the Japanese banking data. Our findings include: (1) A merged bank fundamentally inherits financial soundness of pre-merged banks, without adding special value from the merger. A merger of sound (unsound) banks produced a sound (unsound, respectively) merged financial institution; and (2) In some cases, a merged bank experienced a negative DD right after the merger. The findings are consistent with a view that a primary objective of a merger was to take advantage of the perceived too-big-to-fail policy, rather than to pursue a radical reform. Another interpretation is that mergers with intention of enhancing efficiency resulted in failed implementation of true operational efficiency, such as quick integration of computer operation systems and elimination of duplicating branches.
Handle: RePEc:nbr:nberwo:14518
Template-Type: ReDIF-Paper 1.0
Title: Re-Evaluating Swedish Membership in EMU: Evidence from an Estimated Model
Classification-JEL: E42; E58; F41
Author-Name: Ulf Söderström
Author-Person: pso33
Note: IFM
Number: 14519
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14519
File-URL: http://www.nber.org/papers/w14519.pdf
File-Format: application/pdf
Publication-Status: published as Reevaluating Swedish Membership in the European Monetary Union: Evidence from an Estimated Model, Ulf Söderström. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: I revisit the potential costs and benefits for Sweden of joining the Economic and Monetary Union (EMU) of the European Union. I first show that the Swedish business cycle since the mid-1990s has been closely correlated with the Euro area economies, suggesting that common shocks have been an important driving force of business cycles in Europe. However, evidence from an estimated model of the Swedish economy instead suggests that country-specific shocks have been important for fluctuations in the Swedish economy since 1993, implying that EMU membership could be costly. The model also indicates that the exchange rate has to a large extent acted to destabilize, rather than stabilize, the Swedish economy, pointing to the costs of independent monetary policy with a flexible exchange rate. Finally, counterfactual simulations of the model suggest that Swedish inflation and GDP growth might have been slightly higher if Sweden had been a member of EMU since the launch in 1999, but also that GDP growth might have been more volatile. The evidence is therefore not conclusive about whether or not participation in the monetary union would be advantageous for Sweden.
Handle: RePEc:nbr:nberwo:14519
Template-Type: ReDIF-Paper 1.0
Title: The Unofficial Economy and Economic Development
Classification-JEL: O17
Author-Name: Rafael La Porta
Author-Person: pla273
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: EFG
Number: 14520
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14520
File-URL: http://www.nber.org/papers/w14520.pdf
File-Format: application/pdf
Publication-Status: published as Rafael La Porta & Andrei Shleifer, 2008. "The Unofficial Economy and Economic Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 275-363.
Abstract: In developing countries, informal firms (those that are not registered with the government) account for about half of all economic activity. We consider three broad views of the role of such firms in economic development. According to the romantic view, these firms would become the engine of economic growth if not stopped by government regulation. According to the parasite view, informal firms, by avoiding taxes and regulations, unfairly compete with the more efficient formal firms and, by taking away their market share, undermine economic progress. According to the dual view, informal firms are highly inefficient, do not pose much threat to the formal firms, but also do not contribute to economic growth, which is driven by the efficient formal firms. Using data from World Bank firm level surveys, we find that informal firms are small and extremely unproductive, compared even to the small formal firms, and especially relative to the larger formal firms. Compared to the informal firms, formal ones are run by much better educated managers. As a consequence, they use more capital, have different customers, market their products, and use more external finance. Hardly any formal firms had ever operated informally. This evidence is inconsistent with the romantic and parasite views, but supports the dual view. In this "Walmart" theory of economic development, growth comes from the creation of the highly productive formal firms. Informal firms keep millions of people alive, but disappear over time.
Handle: RePEc:nbr:nberwo:14520
Template-Type: ReDIF-Paper 1.0
Title: Financial Crash, Commodity Prices and Global Imbalances
Classification-JEL: F3
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Pierre-Olivier Gourinchas
Author-Person: pgo28
Note: EFG IFM
Number: 14521
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14521
File-URL: http://www.nber.org/papers/w14521.pdf
File-Format: application/pdf
Publication-Status: published as Financial Crash, Commodity Prices, and Global Imbalances Ricardo J. Caballero, Emmanuel Farhi and Pierre-Olivier Gourinchas Brookings Papers on Economic Activity , Vol. 2008, (Fall, 2008) , pp. 1-55
Abstract: In this paper we argue that the persistent global imbalances, the subprime crisis, and the volatile oil and asset prices that followed it, are tightly interconnected. They all stem from a global environment where sound and liquid financial assets are in scarce supply.
Handle: RePEc:nbr:nberwo:14521
Template-Type: ReDIF-Paper 1.0
Title: Estimating Marginal Returns to Medical Care: Evidence from At-Risk Newborns
Classification-JEL: I12
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Joseph J. Doyle, Jr.
Author-Name: Amanda E. Kowalski
Author-Name: Heidi Williams
Author-Person: pwi239
Note: CH EH
Number: 14522
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14522
File-URL: http://www.nber.org/papers/w14522.pdf
File-Format: application/pdf
Publication-Status: published as Douglas Almond & Joseph J. Doyle & Amanda E. Kowalski & Heidi Williams, 2010. "Estimating Marginal Returns to Medical Care: Evidence from At-risk Newborns," The Quarterly Journal of Economics, Oxford University Press, vol. 125(2), pages 591-634.
Abstract: We estimate marginal returns to medical care for at-risk newborns by comparing health outcomes and medical treatment provision on either side of common risk classifications, most notably the "very low birth weight" threshold at 1500 grams. First, using data on the census of US births in available years from 1983-2002, we find evidence that newborns with birth weights just below 1500 grams have lower one-year mortality rates than do newborns with birth weights just above this cutoff, even though mortality risk tends to decrease with birth weight. One-year mortality falls by approximately one percentage point as birth weight crosses 1500 grams from above, which is large relative to mean one-year mortality of 5.5% just above 1500 grams. Second, using hospital discharge records for births in five states in available years from 1991-2006, we find evidence that newborns with birth weights just below 1500 grams have discontinuously higher costs and frequencies of specific medical inputs. We estimate a $4,000 increase in hospital costs as birth weight approaches 1500 grams from above, relative to mean hospital costs of $40,000 just above 1500 grams. Taken together, these estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1500 grams is on the order of $550,000 in 2006 dollars.
Handle: RePEc:nbr:nberwo:14522
Template-Type: ReDIF-Paper 1.0
Title: An Institutional Theory of Momentum and Reversal
Classification-JEL: D5; D8; G1
Author-Name: Dimitri Vayanos
Author-Person: pva498
Author-Name: Paul Woolley
Note: AP
Number: 14523
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14523
File-URL: http://www.nber.org/papers/w14523.pdf
File-Format: application/pdf
Publication-Status: published as Dimitri Vayanos & Paul Woolley, 2013. "An Institutional Theory of Momentum and Reversal," Review of Financial Studies, Society for Financial Studies, vol. 26(5), pages 1087-1145.
Abstract: We propose a rational theory of momentum and reversal based on delegated portfolio management. An investor can hold assets through an index or an active fund. Investing in the active fund involves a time-varying cost, interpreted as managerial perk or ability. The investor responds to an increase in the cost by flowing out of the active and into the index fund. While prices of assets held by the active fund drop in anticipation of these outflows, the drop is expected to continue, leading to momentum. Because outflows push prices below fundamental values, expected returns eventually rise, leading to reversal. Besides momentum and reversal, fund flows generate comovement, lead-lag effects and amplification, with all effects being larger for assets with high idiosyncratic risk. The active-fund manager's concern with commercial risk makes prices more volatile.
Handle: RePEc:nbr:nberwo:14523
Template-Type: ReDIF-Paper 1.0
Title: High Birth Weight and Cognitive Outcomes
Classification-JEL: I10
Author-Name: Resul Cesur
Author-Name: Inas Rashad
Author-Person: pke191
Note: EH
Number: 14524
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14524
File-URL: http://www.nber.org/papers/w14524.pdf
File-Format: application/pdf
Publication-Status: published as Cesur, Resul; Kelly, Inas Rashad. From Cradle to Classroom: High Birth Weight and Cognitive Outcomes. Forum for Health Economics and Policy, Vol. 13: Iss. 2 (Health Economics), Article 2, 2010.
Abstract: While the effects of low birth weight have long been explored, those of high birth weight have been essentially ignored. Economists have analyzed the negative effects that low birth weight might have on subsequent school outcomes, while taking into account unobserved characteristics that may be common to families with low birth weight babies and negative outcomes in terms of school test scores when children, in addition to labor market income when adults. Today, however, with increasing obesity rates in the United States, high birth weight has become a potential concern, and has been associated in the medical literature with an increased likelihood of becoming an overweight child, adolescent, and subsequently an obese adult. Overweight and obesity, in turn, are associated with a host of negative effects, including lower test scores in school and lower labor market prospects when adults. If studies only focus on low birth weight, they may underestimate the effects of ensuring that mothers receive adequate support during pregnancy. In this study we find that cognitive outcomes are adversely affected not only by low birth weight (<2500 grams) but also by high birth weight (>4500 grams). Our results have policy implications in terms of provision of support for pregnant women.
Handle: RePEc:nbr:nberwo:14524
Template-Type: ReDIF-Paper 1.0
Title: Impossible Frontiers
Classification-JEL: G1; G11; G12; G14; G23; G32
Author-Name: Thomas J. Brennan
Author-Name: Andrew W. Lo
Author-Person: plo171
Note: AP
Number: 14525
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14525
File-URL: http://www.nber.org/papers/w14525.pdf
File-Format: application/pdf
Publication-Status: published as Thomas J. Brennan & Andrew W. Lo, 2010. "Impossible Frontiers," Management Science, INFORMS, vol. 56(6), pages 905-923, June.
Abstract: A key result of the Capital Asset Pricing Model (CAPM) is that the market portfolio---the portfolio of all assets in which each asset's weight is proportional to its total market capitalization---lies on the mean-variance efficient frontier, the set of portfolios having mean-variance characteristics that cannot be improved upon. Therefore, the CAPM cannot be consistent with efficient frontiers for which every frontier portfolio has at least one negative weight or short position. We call such efficient frontiers "impossible", and derive conditions on asset-return means, variances, and covariances that yield impossible frontiers. With the exception of the two-asset case, we show that impossible frontiers are difficult to avoid. Moreover, as the number of assets n grows, we prove that the probability that a generically chosen frontier is impossible tends to one at a geometric rate. In fact, for one natural class of distributions, nearly one-eighth of all assets on a frontier is expected to have negative weights for *every* portfolio on the frontier. We also show that the expected minimum amount of shortselling across frontier portfolios grows linearly with n, and even when shortsales are constrained to some finite level, an impossible frontier remains impossible. Using daily and monthly U.S. stock returns, we document the impossibility of efficient frontiers in the data.
Handle: RePEc:nbr:nberwo:14525
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Merger Review
Classification-JEL: L0; L4
Author-Name: Volker Nocke
Author-Person: pno17
Author-Name: Michael D. Whinston
Author-Person: pwh46
Note: IO
Number: 14526
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14526
File-URL: http://www.nber.org/papers/w14526.pdf
File-Format: application/pdf
Publication-Status: published as Volker Nocke & Michael D. Whinston, 2010. "Dynamic Merger Review," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1201 - 1251.
Abstract: We analyze the optimal dynamic policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and occur over time. Approving a currently proposed merger will affect the profitability and welfare effects of potential future mergers, the characteristics of which may not yet be known to the antitrust authority. We show that, in many cases, this apparently difficult problem has a simple resolution: an antitrust authority can maximize discounted consumer surplus by using a completely myopic merger review policy that approves a merger today if and only if it does not lower consumer surplus given the current market structure.
Handle: RePEc:nbr:nberwo:14526
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Globalization and Its Potentially Alarming Prospects for Low-Wage Workers
Classification-JEL: F0; F20; H0; H3; J20; O1; O23
Author-Name: Hans Fehr
Author-Person: pfe183
Author-Name: Sabine Jokisch
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Note: AG DAE ITI LE ME PE PR
Number: 14527
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14527
File-URL: http://www.nber.org/papers/w14527.pdf
File-Format: application/pdf
Abstract: Will incomes of low and high skilled workers continue to diverge? Yes says our paper's dynamic, six-good, five-region -- U.S., Europe, N.E. Asia (Japan, Korea, Taiwan, Hong Kong), China, and India -- general equilibrium, life-cycle model. The model predicts a near doubling of the ratio of high- to low-skilled wages over the century. Increasing wage inequality arises from a traditional source -- a rising worldwide relative supply of unskilled labor, reflecting Chinese and Indian productivity improvements. But China's and India's education policies matter. If successive Chinese and Indian cohorts become more skilled, major exacerbation of inequality will be precluded.
Handle: RePEc:nbr:nberwo:14527
Template-Type: ReDIF-Paper 1.0
Title: Emerging Market Currency Excess Returns
Classification-JEL: F31; G11; G15
Author-Name: Stephen Gilmore
Author-Name: Fumio Hayashi
Author-Person: pha83
Note: IFM
Number: 14528
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14528
File-URL: http://www.nber.org/papers/w14528.pdf
File-Format: application/pdf
Publication-Status: published as Stephen Gilmore & Fumio Hayashi, 2011. "Emerging Market Currency Excess Returns," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(4), pages 85-111, October.
Abstract: We discuss the foreign currency forward premium puzzle in the context of 20 internationally tradable emerging market currencies. We find that since the late 1990s the broad basket of emerging market currencies has provided significant equity-like excess returns against a number of major market currencies, but with low volatility. We also find that the forward premium, or carry, is significant in explaining that excess return but that excess returns would still have existed even in the absence of positive carry. Our calculation shows that transactions cost due to bid/offer spreads is substantially lower than commonly supposed in the academic literature.
Handle: RePEc:nbr:nberwo:14528
Template-Type: ReDIF-Paper 1.0
Title: Business Cycles in the Euro Area
Classification-JEL: C5; E32; F2; F43
Author-Name: Domenico Giannone
Author-Person: pgi49
Author-Name: Michele Lenza
Author-Person: ple337
Author-Name: Lucrezia Reichlin
Author-Person: pre102
Note: EFG IFM
Number: 14529
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14529
File-URL: http://www.nber.org/papers/w14529.pdf
File-Format: application/pdf
Publication-Status: published as Business Cycles in the Euro Area, Domenico Giannone, Michele Lenza, Lucrezia Reichlin. in Europe and the Euro, Alesina and Giavazzi. 2010
Publication-Status: published as Domenico Giannone & Michele Lenza, 2009. "Business cycles in the euro area," Research Bulletin, European Central Bank, vol. 8, pages 5-7.
Abstract: This paper shows that the EMU has not affected historical characteristics of member countries' business cycles and their cross-correlations. Member countries which had similar levels of GDP per-capita in the seventies have also experienced similar business cycles since then and no significant change associated with the EMU can be detected. For the other countries, volatility has been historically higher and this has not changed in the last ten years. We also find that the aggregate euro area per-capita GDP growth since 1999 has been lower than what could have been predicted on the basis of historical experience and US observed developments. The gap between US and euro area GDP per capita level has been 30% on average since 1970 and there is no sign of catching up or of further widening.
Handle: RePEc:nbr:nberwo:14529
Template-Type: ReDIF-Paper 1.0
Title: Do Enterprise Zones Create Jobs? Evidence from California's Enterprise Zone Program
Classification-JEL: H25; H73; J23; R12
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Jed Kolko
Author-Person: pko228
Note: LS PE
Number: 14530
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14530
File-URL: http://www.nber.org/papers/w14530.pdf
File-Format: application/pdf
Publication-Status: published as Jed Kolko & David Neumark, 2010. "Do some enterprise zones create jobs?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 5-38.
Publication-Status: published as Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
Abstract: We use new establishment-level data and geographic mapping methods to improve upon evaluations of the effectiveness of state enterprise zones, focusing on California's program. Because zone boundaries do not follow census tracts or zip codes, we created digitized maps of original zone boundaries and later expansions. We combine these maps with geocoded observations on most businesses located in California. The evidence indicates that enterprise zones do not increase employment. We also find no shift of employment toward the lower-wage workers targeted by enterprise zone incentives. We conclude that the program is ineffective in achieving its primary goals.
Handle: RePEc:nbr:nberwo:14530
Template-Type: ReDIF-Paper 1.0
Title: Credit Constraints, Heterogeneous Firms, and International Trade
Classification-JEL: F10; F14; F36; G20; G28; G32
Author-Name: Kalina Manova
Author-Person: pma2520
Note: ITI
Number: 14531
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14531
File-URL: http://www.nber.org/papers/w14531.pdf
File-Format: application/pdf
Publication-Status: published as Credit Constraints, Heterogeneous Firms, and International Trade Review of Economic Studies 80 (2013), p.711-744. Updated version of NBER Working Paper 14531.
Abstract: This paper examines the detrimental consequences of financial market imperfections for international trade. I develop a heterogeneous-firm model with countries at different levels of financial development and sectors of varying financial vulnerability. Applying this model to aggregate trade data, I study the mechanisms through which credit constraints operate. First, financial development increases countries' exports above and beyond its impact on overall production. Firm selection into exporting accounts for a third of the trade-specific effect, while two thirds are due to reductions in firm-level exports. Second, financially advanced economies export a wider range of products and their exports experience less product turnover. Finally, while all countries service large destinations, exporters with superior financial institutions have more trading partners and also enter smaller markets. All of these effects are magnified in financially vulnerable sectors. These results have important policy implications for less developed economies that rely on exports for economic growth but suffer from poor financial contractibility.
Handle: RePEc:nbr:nberwo:14531
Template-Type: ReDIF-Paper 1.0
Title: Bretton Woods and the Great Inflation
Classification-JEL: N1; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Barry Eichengreen
Author-Person: pei2
Note: DAE ME
Number: 14532
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14532
File-URL: http://www.nber.org/papers/w14532.pdf
File-Format: application/pdf
Publication-Status: published as Bretton Woods and the Great Inflation, Michael Bordo, Barry Eichengreen. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: In this paper we show that the acceleration of inflation in the United States after 1965 reflected a shift in perceived responsibility for managing the country's international financial position. Prior to 1965 this responsibility was lodged primarily with the Fed, whose policies resembled those of a central bank playing by the gold standard rules of the game. Over time, however, this responsibility was increasingly assumed by the Treasury, while the Federal Reserve acquired increasing room for maneuver as a result of the adoption of the Interest Equalization Tax and other policies with effects analogous to capital controls. Once the external constraint shaped policy less powerfully, the Fed pursued other goals more aggressively, resulting in more inflationary pressure. We document these points with a quantitative and qualitative analysis of the minutes of the Federal Open Market Committee.
Handle: RePEc:nbr:nberwo:14532
Template-Type: ReDIF-Paper 1.0
Title: Assessing the Emerging Global Financial Architecture: Measuring the Trilemma's Configurations over Time
Classification-JEL: F15; F21; F31; F36; F41; O24
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Hiro Ito
Author-Person: pit4
Note: IFM ITI
Number: 14533
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14533
File-URL: http://www.nber.org/papers/w14533.pdf
File-Format: application/pdf
Abstract: We develop a methodology that intuitively characterizes the choices countries have made with respect to the trilemma during the post Bretton-Woods period. The paper first outlines the new metrics for measuring the degree of exchange rate flexibility, monetary independence, and capital account openness while taking into account the recent development of substantial international reserve accumulation. The evolution of our "trilemma indexes" illustrates that, after the early 1990s, industrialized countries accelerated financial openness, but reduced the extent of monetary independence while sharply increasing exchange rate stability, all reflecting the introduction of the euro. In contrast, emerging market countries pursued exchange rate stability as their key priority up to the late 1980s while non-emerging market developing countries has pursued it throughout the period since 1970. As a stark difference from the latter group of countries, emerging market countries have converged towards intermediate levels of all three indexes, characterizing managed flexibility while retaining some degree of monetary autonomy and accelerating financial openness. This recent trend appears to be sustained by using sizable international reserves as a buffer. We also confirm that the weighted sum of the three indexes adds up to a constant, validating the notion that a rise in one trilemma variable should be traded-off with a drop of the weighted sum of the other two. The second part of the paper deals with normative aspects of the trilemma, relating the policy choices to macroeconomic outcomes such as the volatility of output growth and inflation, and medium term inflation rates. Some key findings for developing countries include: (i) greater monetary independence can dampen output volatility while greater exchange rate stability implies greater output volatility, which can be mitigated by reserve accumulation; (ii) greater monetary autonomy is associated with a higher level of inflation while greater exchange rate stability and greater financial openness could lower the inflation level; (iii) a policy pursuit of stable exchange rate while financial development is at the medium level can increase output volatility, (iv) greater financial openness with a high level of financial development can reduce output volatility, though greater financial openness with a low level of financial development can be volatility-increasing; (v) net inflow of portfolio investment and bank lending can increase output volatility and higher levels of short-term debt or total debt services can increase both the level and the volatility of inflation.
Handle: RePEc:nbr:nberwo:14533
Template-Type: ReDIF-Paper 1.0
Title: Inflation Determination with Taylor Rules: Is New Keynesian Analysis Critically Flawed?
Classification-JEL: E4; E5; E52
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 14534
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14534
File-URL: http://www.nber.org/papers/w14534.pdf
File-Format: application/pdf
Publication-Status: published as McCallum, Bennett T., 2009. "Inflation determination with Taylor rules: Is new-Keynesian analysis critically flawed?," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1101-1108, November.
Abstract: Cochrane (2007) has strongly questioned the basic economic logic of current mainstream monetary policy analysis, arguing that the standard notion --that "determinacy" of a rational expectations (RE) equilibrium suffices to imply that stable inflation behavior will be generated -- is incorrect. This is because New Keynesian (NK) models are typically consistent with the existence of RE paths with explosive inflation rates (in addition to one or more stable paths) that normally do not imply explosions in real variables relevant for transversality conditions. Consequently, the usual logic does not imply the absence of explosive inflation. That result does not, however, justify negative conclusions about NK analysis. For there is a different criterion that is logically satisfactory for the purpose at hand. This is the requirement that, to be plausible, a RE solution must satisfy the property of least-squares learnability. Adoption of this criterion, which should be attractive to analysts concerned with actual monetary policy, serves to justify in principle the bulk of current mainstream analysis.
Handle: RePEc:nbr:nberwo:14534
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform
Classification-JEL: I22
Author-Name: Helena Skyt Nielsen
Author-Person: pni18
Author-Name: Torben Sørensen
Author-Name: Christopher R. Taber
Note: ED LS PE
Number: 14535
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14535
File-URL: http://www.nber.org/papers/w14535.pdf
File-Format: application/pdf
Publication-Status: published as Helena Skyt Nielsen & Torben Sørensen & Christopher Taber, 2010. "Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 185-215, May.
Publication-Status: published as Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform, Helena Skyt Nielsen, Torben Sørensen, Christopher Taber. in Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), Gordon and Piketty. 2010
Abstract: In this paper, we investigate the responsiveness of the demand for college to changes in student aid arising from a Danish reform. We separately identify the effect of aid from that of other observed and unobserved variables such as parental income. We exploit the combination of a kinked aid scheme and a reform of the student aid scheme to identify the effect of direct costs on college enrollment. To allow for heterogeneous responses due to borrowing constraints, we use detailed information on parents' assets. We find that enrollment is less responsive than found in other studies and that the presence of borrowing constraints only deters college enrollment to a minor extent.
Handle: RePEc:nbr:nberwo:14535
Template-Type: ReDIF-Paper 1.0
Title: Heights and Human Welfare: Recent Developments and New Directions
Classification-JEL: N00; O1
Author-Name: Richard H. Steckel
Author-Person: pst352
Note: CH DAE EH LS
Number: 14536
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14536
File-URL: http://www.nber.org/papers/w14536.pdf
File-Format: application/pdf
Publication-Status: published as Steckel, Richard H., 2009. "Heights and human welfare: Recent developments and new directions," Explorations in Economic History, Elsevier, vol. 46(1), pages 1-23, January.
Abstract: Since 1995 approximately 325 publications on stature have appeared in the social sciences, which is more than a four-fold increase in the rate of production relative to the period 1977-1994. The expansion occurred in several areas, but especially within economics, indicating that heights are now widely accepted as a useful measure of human welfare. Much of this new work extends beyond the traditional bailiwick of anthropometric history, including biological welfare during economic and political crises; anthropometric influences on wages; the welfare of women relative to men in the contemporary world; the fetal origins hypothesis; and inequality in the developing world. The approach has also expanded within economic history to consider the consequences of empire for colonials; the health of populations lacking traditional measures of social performance; the consequences of smallpox; and very long-term trends in health. Much has also been learned about socioeconomic aspects of inequality, the welfare implications of industrialization, and socioeconomic determinants of stature. The last is a work in progress and one may doubt whether sufficient longitudinal evidence will become available for a complete understanding of the variety and strength of pathways that affect human physical growth.
Handle: RePEc:nbr:nberwo:14536
Template-Type: ReDIF-Paper 1.0
Title: Top Wage Incomes in Japan, 1951-2005
Classification-JEL: D31; J30; O15
Author-Name: Chiaki Moriguchi
Author-Person: pmo419
Note: LS PE
Number: 14537
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14537
File-URL: http://www.nber.org/papers/w14537.pdf
File-Format: application/pdf
Publication-Status: published as Moriguchi, Chiaki, 2010. "Top wage incomes in Japan, 1951-2005," Journal of the Japanese and International Economies, Elsevier, vol. 24(3), pages 301-333, September.
Abstract: Using wage income tax statistics, we construct continuous series of upper wage income shares in Japan from 1951 to 2005 to document the evolution of top wage incomes and investigate their long-run determinants. We find that, while the middle wage income class gained enormously both in absolute and relative terms during the period of high economic growth, the upper wage income class faired comparatively better after 1975. In particular, the share of total wage accruing to the top 1% wage earners has risen steadily in the last ten years. Using a simple time-series regression analysis, we find that marginal income tax rates, corporate performance, female labor participation, and labor disputes are important determinants of top wage income shares in post-WWII Japan. Although not conclusive, our results suggest that much of the recent gains in wage income shares at the top can be explained by the changes in these four factors, placing a less emphasis on a story of structural change.
Handle: RePEc:nbr:nberwo:14537
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy, Information, and Demand Elasticity: Survey and Experimental Evidence from Mexico
Classification-JEL: H0; H55; L10
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Lydia Tejeda-Ashton
Note: AG IO PE
Number: 14538
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14538
File-URL: http://www.nber.org/papers/w14538.pdf
File-Format: application/pdf
Abstract: We use responses to a survey and experiment with participants in Mexico's privatized social security system to examine how financial literacy impacts workers' choice behavior and how simplifying information on management fees may increase measures of price elasticity sensitivity among the financially illiterate. We find that by presenting fees in pesos instead of annual percentage rates, financially illiterate workers focus much more on fees when choosing between investment funds, selecting funds with lower average fees in hypothetical choice settings. Even though changes in information have small impacts on fees of the selected fund, holding fees constant, we show that changes in choice behavior imply a substantial increase in price sensitivity. Hence, the way in which information is presented to workers can have a substantial impact on optimal fees that firms can charge in the marketplace.
Handle: RePEc:nbr:nberwo:14538
Template-Type: ReDIF-Paper 1.0
Title: Happiness Adaptation to Income beyond "Basic Needs"
Classification-JEL: D0; I31
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Robert MacCulloch
Note: PE
Number: 14539
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14539
File-URL: http://www.nber.org/papers/w14539.pdf
File-Format: application/pdf
Publication-Status: published as Di Tella, Rafael, and Robert MacCulloch. "Happiness Adaptation to Income beyond 'Basic Needs'." Chap. 8 in International Differences in Well-Being, edited by Ed Diener, John Helliwell, and Daniel Kahneman, 217–247. New York: Oxford University Press, 2010.
Abstract: We test for whether, once "basic needs" are satisfied, there is happiness adaptation to further gains in income using three data sets. Individual German Panel Data from 1985-2000, and data on the well-being of over 600,000 people in a panel of European countries from 1975-2002, shows different patterns of adaptation to income across the rich and poor. We find evidence that for wealthy Germans, and for the rich half of European nations, higher levels of per capita income don't buy greater happiness. The reason appears to be adaptation. However even for the rich half of European nations such habituation may take over 5 years so the happiness gains that they experience, whilst not permanent, can still be relatively long-lasting. Finally we study a cross section of nations in 2005 from the World Gallup Poll and find that the past 45 years of economic growth (from 1960-2005) in the rich half of nations has not brought happiness gains above those that were already in place once the 1960s standard of living had been achieved. However in the poorest half of nations we cannot reject the null hypothesis that the happiness gains they have experienced from the past 45 years of growth have been the same as the gains that they experienced from growth prior to the 1960s.
Handle: RePEc:nbr:nberwo:14539
Template-Type: ReDIF-Paper 1.0
Title: Labor Supply Responses to Marginal Social Security Benefits: Evidence from Discontinuities
Classification-JEL: H55; J22; J26
Author-Name: Jeffrey B. Liebman
Author-Person: pli184
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: David G. Seif
Note: AG LS PE
Number: 14540
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14540
File-URL: http://www.nber.org/papers/w14540.pdf
File-Format: application/pdf
Publication-Status: published as Liebman, Jeffrey B. & Luttmer, Erzo F.P. & Seif, David G., 2009. "Labor supply responses to marginal Social Security benefits: Evidence from discontinuities," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1208-1223, December.
Abstract: A key question for Social Security reform is whether workers currently perceive the link on the margin between the Social Security taxes they pay and the Social Security benefits they will receive. We estimate the effects of the marginal Social Security benefits that accrue with additional earnings on three measures of labor supply: retirement, hours, and labor earnings. We develop a new approach to identifying these incentive effects by exploiting five provisions in the Social Security benefit rules that generate discontinuities in marginal benefits or non-linearities in marginal benefits that converge to discontinuities as uncertainty about the future is resolved. We find clear evidence that individuals approaching retirement (age 52 and older) respond to the Social Security tax-benefit link on the extensive margin of their labor supply decisions: we estimate that a 10 percent increase in the net-of-tax share reduces the two-year retirement hazard by a statistically significant 2.1 percentage points from a base rate of 15 percent. The evidence with regards to labor supply responses on the intensive margin is more mixed: we estimate that the elasticity of hours with respect to the net-of-tax share is 0.41 and statistically significant, but we do not find a statistically significant earnings elasticity.
Handle: RePEc:nbr:nberwo:14540
Template-Type: ReDIF-Paper 1.0
Title: More Women Missing, Fewer Girls Dying: The Impact of Abortion on Sex Ratios at Birth and Excess Female Mortality in Taiwan
Classification-JEL: J1
Author-Name: Ming-Jen Lin
Author-Person: pli194
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: Jin-Tan Liu
Author-Person: pli620
Note: EH
Number: 14541
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14541
File-URL: http://www.nber.org/papers/w14541.pdf
File-Format: application/pdf
Abstract: This paper presents novel empirical evidence on the impact of access to abortion on sex ratios at birth (SRB), excess female mortality (EFM) and fertility in Taiwan. For identification, we exploit plausibly exogenous variation in the availability of sex-selective abortion caused by the legalization of abortion. Our results show that the legalization of abortion accounts for almost all of the observed increase in SRB during the 1980s and decreased EFM by approximately 20%. Approximately ten more female infants survived for every one hundred that were aborted. Interestingly, we find that while abortion reduced overall fertility, it increased fertility for older mothers.
Handle: RePEc:nbr:nberwo:14541
Template-Type: ReDIF-Paper 1.0
Title: The Estimated Effects of the Euro on Trade: Why Are They Below Historical Effects of Monetary Unions Among Smaller Countries?
Classification-JEL: F01; F33; F4
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 14542
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14542
File-URL: http://www.nber.org/papers/w14542.pdf
File-Format: application/pdf
Publication-Status: published as The Estimated Trade Effects of the Euro: Why Are They Below Those from Historical Monetary Unions among Smaller Countries?, Jeffrey Frankel. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: Andy Rose (2000), followed by many others, has used the gravity model of bilateral trade on a large data set to estimate the trade effects of monetary unions among small countries. The finding has been large estimates: Trade among members seems to double or triple, that is, to increase by 100-200%. After the advent of EMU in 1999, Micco, Ordoñez and Stein and others used the gravity model on a much smaller data set to estimate the effects of the euro on trade among its members. The estimates tend to be statistically significant, but far smaller in magnitude: on the order of 10-20% during the first four years. What explains the discrepancy? This paper seeks to address two questions. First, do the effects on intra-euroland trade that were estimated in the euro's first four years hold up in the second four years? The answer is yes. Second, and more complicated, what is the reason for the big discrepancy vis-à-vis other currency unions? We investigate three prominent possible explanations for the gap between 15% and 200%. First, lags. The euro is still very young. Second, size. The European countries are much bigger on average than most of those who had formed currency unions in the past. Third, endogeneity of the decision to adopt an institutional currency link. Perhaps the high correlations estimated in earlier studies were spurious, an artifact of reverse causality. Contrary to expectations, we find no evidence that any of these factors explains a substantial share of the gap, let alone all of it.
Handle: RePEc:nbr:nberwo:14542
Template-Type: ReDIF-Paper 1.0
Title: Asset Pricing Tests with Long Run Risks in Consumption Growth
Classification-JEL: G12
Author-Name: George M. Constantinides
Author-Person: pco144
Author-Name: Anisha Ghosh
Note: AP
Number: 14543
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14543
File-URL: http://www.nber.org/papers/w14543.pdf
File-Format: application/pdf
Publication-Status: published as George M. Constantinides & Anisha Ghosh, 2011. "Asset Pricing Tests with Long-run Risks in Consumption Growth," Review of Asset Pricing Studies, vol 1(1), pages 96-136.
Abstract: A novel methodology in testing the long-run risks model of Bansal and Yaron (2004) is presented based on the observation that, under the null, the potentially latent state variables, "long-run risk" and the conditional variance of its innovation, are known a¢ ne functions of the observable market-wide price-dividend ratio and risk free rate. In linear forecasting regressions of consumption growth and returns by the price-dividend ratio and risk free rate, the model implies much higher forecastability than what is observed in the data over 1931 -2009. The co-integrated variant of the model by Bansal, Gallant, and Tauchen (2007), also implies much higher forecastability of returns than what is observed in the data. Finally, we reject the models' implications in jointly pricing the cross-section of returns and fitting the unconditional time series moments of consumption and dividend growth. The results suggest that either some important state variable is missing or that the models should be generalized in a way that the lagged price-dividend ratio and risk free enter the regressions in a non-linear fashion.
Handle: RePEc:nbr:nberwo:14543
Template-Type: ReDIF-Paper 1.0
Title: Mispricing of S&P 500 Index Options
Classification-JEL: G12; G13
Author-Name: George M. Constantinides
Author-Person: pco144
Author-Name: Jens Carsten Jackwerth
Author-Person: pja3
Author-Name: Stylianos Perrakis
Author-Person: ppe489
Note: AP
Number: 14544
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14544
File-URL: http://www.nber.org/papers/w14544.pdf
File-Format: application/pdf
Publication-Status: published as Review of Financial Studies, March 2009
Abstract: Widespread violations of stochastic dominance by one-month S&P 500 index call options over 1986-2006 imply that a trader can improve expected utility by engaging in a zero-net-cost trade net of transaction costs and bid-ask spread. Although pre-crash option prices conform to the Black-Scholes-Merton model reasonably well, they are incorrectly priced if the distribution of the index return is estimated from time-series data. Substantial violations by post-crash OTM calls contradict the notion that the problem primarily lies with the left-hand tail of the index return distribution and that the smile is too steep. The decrease in violations over the post-crash period 1988-1995 is followed by a substantial increase over 1997-2006 which may be due to the lower quality of the data but, in any case, does not provide evidence that the options market is becoming more rational over time.
Handle: RePEc:nbr:nberwo:14544
Template-Type: ReDIF-Paper 1.0
Title: Mandates and the Affordability of Health Care
Classification-JEL: I18; I32; I38
Author-Name: Sherry A. Glied
Note: EH
Number: 14545
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14545
File-URL: http://www.nber.org/papers/w14545.pdf
File-Format: application/pdf
Publication-Status: published as Sherry Glied, 2009. "Mandates and the Affordability of Health Care," INQUIRY: The Journal of Health Care Organization, Provision, and Financing, vol 46(2), pages 203-214.
Abstract: This paper examines the economic rationale of affordability exemptions in the context of a health insurance mandate. On its face, an affordability exemption makes little sense-- it exempts people from purchasing a good that policymakers believe benefits them. I provide an economic definition of affordability and discuss how it is implemented in the contexts of food, housing, and health care. Affordability standards are frequently used in food and housing policy making, but both empirically and theoretically health care operates quite differently than do these other merit goods. These differences help explain why the use of affordability in health policymaking is so different from its use in these other contexts. I conclude with a discussion of the relationship between mandates and exemptions in other health care systems.
Handle: RePEc:nbr:nberwo:14545
Template-Type: ReDIF-Paper 1.0
Title: Why are Saving Rates of Urban Households in China Rising?
Classification-JEL: D12; E21; O16
Author-Name: Marcos Chamon
Author-Person: pch173
Author-Name: Eswar Prasad
Author-Person: ppr1
Note: IFM
Number: 14546
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14546
File-URL: http://www.nber.org/papers/w14546.pdf
File-Format: application/pdf
Publication-Status: published as Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
Abstract: From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. Saving rates have increased across all demographic groups although the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high saving rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, as reflected in constraints on borrowing against future income and low returns on financial assets.
Handle: RePEc:nbr:nberwo:14546
Template-Type: ReDIF-Paper 1.0
Title: Can Structural Small Open Economy Models Account for the Influence of Foreign Disturbances?
Classification-JEL: F41
Author-Name: Alejandro Justiniano
Author-Person: pju154
Author-Name: Bruce Preston
Author-Person: ppr134
Note: EFG
Number: 14547
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14547
File-URL: http://www.nber.org/papers/w14547.pdf
File-Format: application/pdf
Publication-Status: published as Justiniano, Alejandro & Preston, Bruce, 2010. "Can structural small open-economy models account for the influence of foreign disturbances?," Journal of International Economics, Elsevier, vol. 81(1), pages 61-74, May.
Abstract: This paper demonstrates that an estimated, structural, small open economy model of the Canadian economy cannot account for the substantial influence of foreign-sourced disturbances identified in numerous reduced-form studies. The benchmark model assumes uncorrelated shocks across countries and implies that U.S. shocks account for less than 3 percent of the variability observed in several Canadian series, at all forecast horizons. Accordingly, model-implied cross-correlation functions between Canada and U.S. are essentially zero. Both findings are at odds with the data. A specification that assumes correlated cross-country shocks partially resolves this discrepancy, but still falls well short of matching reduced-form evidence.
Handle: RePEc:nbr:nberwo:14547
Template-Type: ReDIF-Paper 1.0
Title: What is a Company Really Worth? Intangible Capital and the "Market to Book Value" Puzzle
Classification-JEL: G3; M41; O30
Author-Name: Charles R. Hulten
Author-Name: Xiaohui Hao
Note: PR
Number: 14548
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14548
File-URL: http://www.nber.org/papers/w14548.pdf
File-Format: application/pdf
Abstract: "What is a company really worth?" is a question asked repeatedly during the recent financial crisis. Attention has been focused on short-term valuation issues, like the "mark-to-market" controversy. Sorting out these issues is complicated by the fact that the market puts a value on shareholder equity that is consistently more than twice the reported book value of a company. Numerous observers have pointed to the absence of most intangible assets from financial statements as an important source of this puzzle. We use Compustat financial data for 617 R&D intensive firms to test this possibility. We find that conventional book value alone explains only 31 percent of the market capitalization of these firms in 2006, and that this increases to 75 percent when our estimates of intangible capital are included. The debt-equity ratio also falls from 1.46 to 0.61. These findings suggest that financial reports tend to substantially understate the long-run intrinsic value of corporate America.
Handle: RePEc:nbr:nberwo:14548
Template-Type: ReDIF-Paper 1.0
Title: Bankruptcy: Past Puzzles, Recent Reforms, and the Mortgage Crisis
Classification-JEL: E44; G01; K35; R31
Author-Name: Michelle J. White
Author-Person: pwh52
Note: LE
Number: 14549
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14549
File-URL: http://www.nber.org/papers/w14549.pdf
File-Format: application/pdf
Publication-Status: published as Michelle J. White, 2009. "Bankruptcy: Past Puzzles, Recent Reforms, and the Mortgage Crisis," American Law and Economics Review, Oxford University Press, vol. 11(1), pages 1-23.
Abstract: This paper discusses four bankruptcy-related policy issues. First, what is the economic rationale for having a bankruptcy procedure at all and what defines an economically efficient bankruptcy procedure? Second, why did the number of U.S. bankruptcy filings increase so dramatically between 1980 and 2005? Third, a major bankruptcy reform went into effect in the U.S. in 2005--what did it do and how did it affect credit and mortgage markets? Finally, the paper discusses the mortgage crisis, the high social cost of foreclosures, and the difficulty of avoiding foreclosure by voluntarily renegotiation of mortgage contracts, even when such renegotiations are in the joint interest of debtors and creditors. I also discuss the pros and cons of government programs to refinance mortgages and the possibility of giving bankruptcy judges new power to change the terms of mortgage contracts in bankruptcy.
Handle: RePEc:nbr:nberwo:14549
Template-Type: ReDIF-Paper 1.0
Title: Improving Educational Outcomes for Poor Children
Classification-JEL: I20
Author-Name: Brian Jacob
Author-Name: Jens Ludwig
Note: CH ED
Number: 14550
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14550
File-URL: http://www.nber.org/papers/w14550.pdf
File-Format: application/pdf
Publication-Status: published as Jacob, Brian and Jens Ludwig ( 2009 ) “Improving educational outcomes for poor children.” In Changing Poverty , Changing Policies , Edited by Maria Cancian and Sheldon Danziger. New York: Russell Sag e Foundation Press. pp. 266 - 300.
Abstract: This review paper, prepared for the forthcoming Russell Sage volume Changing Poverty, considers the ability of different education policies to improve the learning outcomes of low-income children in America. Disagreements on this question stem in part from different beliefs about the problems with our nation's public schools. In our view there is some empirical support for each of the general concerns that have been raised about public schools serving high-poverty student populations, including: the need for more funding for those school inputs where additional spending is likely to pass a benefit-cost test; limited capacity of many schools to substantially improve student learning by improving the quality of instruction on their own; and the need for improved incentives for both teachers and students, and for additional operational flexibility. Evidence suggests that the most productive changes to existing education policies are likely to come from increased investments in early childhood education for poor children, improving the design of the federal No Child Left Behind accountability system, providing educators with incentives to adopt practices with a compelling research base while expanding efforts to develop and identify effective instructional regimes, and continued support and evaluation of a variety of public school choice options.
Handle: RePEc:nbr:nberwo:14550
Template-Type: ReDIF-Paper 1.0
Title: What are the Effects of Fiscal Policy Shocks?
Classification-JEL: C32; E60; E62; H20; H50; H60
Author-Name: Andrew Mountford
Author-Person: pmo81
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG IFM PE
Number: 14551
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14551
File-URL: http://www.nber.org/papers/w14551.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Mountford & Harald Uhlig, 2009. "What are the effects of fiscal policy shocks?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 960-992.
Abstract: We propose and apply a new approach for analyzing the effects of fiscal policy using vector autoregressions. Specifically, we use sign restrictions to identify a government revenue shock as well as a government spending shock, while controlling for a generic business cycle shock and a monetary policy shock. We explicitly allow for the possibility of announcement effects, i.e., that a current fiscal policy shock changes fiscal policy variables in the future, but not at present. We construct the impulse responses to three linear combinations of these fiscal shocks, corresponding to the three scenarios of deficit-spending, deficit-financed tax cuts and a balanced budget spending expansion. We apply the method to US quarterly data from 1955-2000. We find that deficit-financed tax cuts work best among these three scenarios to improve GDP, with a maximal present value multiplier of five dollars of total additional GDP per each dollar of the total cut in government revenue five years after the shock.
Handle: RePEc:nbr:nberwo:14551
Template-Type: ReDIF-Paper 1.0
Title: An Exploration of Local R&D Spillovers in France
Classification-JEL: C21; O30; O32; O47
Author-Name: Jacques Mairesse
Author-Person: pma712
Author-Name: Benoit Mulkay
Author-Person: pmu215
Note: PR
Number: 14552
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14552
File-URL: http://www.nber.org/papers/w14552.pdf
File-Format: application/pdf
Publication-Status: published as Jacques Mairesse & Benoît Mulkay, 2007. "An Exploration of Local R&D Spillovers in France," Annales d'Economie et de Statistique, ADRES, issue 87-88, pages 08, Juillet-D.
Abstract: This paper is an attempt to assess the existence and magnitude of local research spillovers in France. We rely on the model of an extended production function (Cobb-Douglas and Translog) with both local and neighborhood R&D capital stocks. We estimate this model on 312 employment areas as of 1999, first for the whole economy, then separately for five large manufacturing industries. The estimated elasticities of productivity with respect to R&D capital are significant and plausible, both within own-area and across neighboring areas as well as within own-industry, but they are weaker across different industries.
Handle: RePEc:nbr:nberwo:14552
Template-Type: ReDIF-Paper 1.0
Title: The Slow Decline of East Germany
Classification-JEL: E20; J61; J64; O11; O18; O33; P20; P25; R12; R23
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG ITI LS
Number: 14553
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14553
File-URL: http://www.nber.org/papers/w14553.pdf
File-Format: application/pdf
Publication-Status: published as Uhlig, Harald, 2008. "The slow decline of East Germany," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 517-541, December.
Abstract: Fifteen years after German reunification, the facts about slow regional convergence have born out the prediction of Barro (1991), except that migration out of East Germany has not slowed down. I document that in particular the 18-29 year old are leaving East Germany, and that the emigration has accelerated in recent years. I document that low wages, high unemployment and increasing reliance on social security persist across wide regions of East Germany together with these migration patterns. To understand these patterns, I use an extension of the standard labor search model introduced in Uhlig (2006, 2008) by allowing for migration and network externalities. In that theory, two equilibria can result: one with a high networking rate, high average labor productivity, low unemployment and no emigration ("West Germany'') and one with a low networking rate, low average labor productivity, high unemployment and a constant rate of emigration ("East Germany''). The model does not imply any obviously sound policies to move from the weakly networked equilibrium to the highly networked equilibrium.
Handle: RePEc:nbr:nberwo:14553
Template-Type: ReDIF-Paper 1.0
Title: Task Trade between Similar Countries
Classification-JEL: F12; F23
Author-Name: Gene M. Grossman
Author-Person: pgr21
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI
Number: 14554
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14554
File-URL: http://www.nber.org/papers/w14554.pdf
File-Format: application/pdf
Publication-Status: published as Gene M. Grossman & Esteban Rossi‐Hansberg, 2012. "Task Trade Between Similar Countries," Econometrica, Econometric Society, vol. 80(2), pages 593-629, 03.
Abstract: We propose a theory of task trade between countries that have similar relative factor endowments but may differ in size. Firms produce differentiated goods by performing a continuum of tasks, each of which generates local spillovers. Tasks can be performed at home or abroad, but offshoring entails costs that vary by task. In equilibrium, the tasks with the highest offshoring costs may not be traded. Among the remainder, those with the relatively higher offshoring costs are performed in the country that has the higher wage and higher aggregate output. We discuss the relationship between equilibrium wages, equilibrium outputs, and relative country size and examine how the pattern of specialization reflects the key parameters of the model.
Handle: RePEc:nbr:nberwo:14554
Template-Type: ReDIF-Paper 1.0
Title: Great Fortunes of the Gilded Age
Classification-JEL: N11; N2
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 14555
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14555
File-URL: http://www.nber.org/papers/w14555.pdf
File-Format: application/pdf
Publication-Status: published as "Great Fortunes of the Gilded Age." Journal of American Economic History , a publication of the 2 American Economic History Association, Japan. No. 9, March, 1 - 18, (in Japanese).
Abstract: This paper explores the origins of the great fortunes of the Gilded Age. It relies mainly on two lists of millionaires published in 1892 and 1902, similar to the Forbes magazine list of the 400 richest Americans. Manufacturing, as might be expected, was the most important source of Gilded Age fortunes. Many of the millionaires, moreover, won their fortunes by exploiting the latest technology: Alfred D. Chandler's "continuous-flow production." A more surprising finding is that wholesale and retail trade, real estate, and finance together produced more millionaires than manufacturing. Real estate and finance, moreover, were by far the most important secondary and tertiary sources of Gilded Age fortunes: entrepreneurs started in many sectors, but then expanded their fortunes mainly through investments in real estate and financial assets. Inheritance was also important, especially in older regions
Handle: RePEc:nbr:nberwo:14555
Template-Type: ReDIF-Paper 1.0
Title: A Resource Belief-Curse? Oil and Individualism
Classification-JEL: E62; P16
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Juan Dubra
Author-Person: pdu45
Author-Name: Robert MacCulloch
Note: POL
Number: 14556
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14556
File-URL: http://www.nber.org/papers/w14556.pdf
File-Format: application/pdf
Abstract: We study the correlation between a belief concerning individualism and a measure of luck in the US during the period 1983-2004. The measure of beliefs is the answer to a question related to whether the poor should be helped by the government or if they should help themselves, while the measure of luck is the share of the oil industry in the state's economy multiplied by the price of oil. The correlation is negative, suggesting that more reliance on luck is correlated with less individualism. We provide three short models that help interpret this correlation. One implication of this finding is that societies that depend heavily on oil, and perhaps natural resources more generally, will experience a heavier demand for government intervention. We argue that if a government cares about the impact of its natural resource policies on the demand of government intervention more generally, it should take this effect into account.
Handle: RePEc:nbr:nberwo:14556
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Corporate Ownership After IPO: The Impact of Investor Protection
Classification-JEL: G3; K22
Author-Name: C. Fritz Foley
Author-Name: Robin Greenwood
Note: CF LE
Number: 14557
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14557
File-URL: http://www.nber.org/papers/w14557.pdf
File-Format: application/pdf
Publication-Status: published as C. Fritz Foley & Robin Greenwood, 2010. "The Evolution of Corporate Ownership after IPO: The Impact of Investor Protection," Review of Financial Studies, vol 23(3), pages 1231-1260.
Abstract: Recent research documents that ownership concentration is higher in countries with weak investor protection. However, drawing on panel data on corporate ownership in 34 countries between 1995 and 2006, we show this pattern does not hold for newly public firms, which tend to have concentrated ownership regardless of the level of investor protection. We show that firms in countries with strong investor protection are more likely to experience decreases in ownership concentration after listing, that these decreases appear in response to growth opportunities, and that they are associated with new share issuance. We consider the implications of these findings for financing choices and patterns in firm growth and analyze alternative explanations for the diffusion of ownership that could distort our interpretations. We conclude that ownership concentration falls as firms age following their IPO in countries with strong investor protection because firms in these countries raise capital and grow, diluting blockholders in the process.
Handle: RePEc:nbr:nberwo:14557
Template-Type: ReDIF-Paper 1.0
Title: Does Openness to International Financial Flows Raise Productivity Growth?
Classification-JEL: F36; F41; F43
Author-Name: M. Ayhan Kose
Author-Person: pko65
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Author-Name: Marco E. Terrones
Author-Person: pte49
Note: EFG IFM PR
Number: 14558
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14558
File-URL: http://www.nber.org/papers/w14558.pdf
File-Format: application/pdf
Publication-Status: published as Ayhan Kose, M. & Prasad, Eswar S. & Terrones, Marco E., 2009. "Does openness to international financial flows raise productivity growth?," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 554-580, June.
Abstract: Economic theory has identified a number of channels through which openness to international financial flows could raise productivity growth. However, while there is a vast empirical literature analyzing the impact of financial openness on output growth, far less attention has been paid to its effects on productivity growth. We provide a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result. We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. The negative relationship between external debt liabilities and TFP growth is attenuated in economies with higher levels of financial development and better institutions.
Handle: RePEc:nbr:nberwo:14558
Template-Type: ReDIF-Paper 1.0
Title: Rebate Rules in Threshold Public Good Provision
Classification-JEL: C9; C91; C92; H4; H41; Q0; Q5
Author-Name: Michael A. Spencer
Author-Person: psp120
Author-Name: Stephen K. Swallow
Author-Name: Jason F. Shogren
Author-Person: psh64
Author-Name: John A. List
Author-Person: pli176
Note: EEE PE
Number: 14559
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14559
File-URL: http://www.nber.org/papers/w14559.pdf
File-Format: application/pdf
Publication-Status: published as Spencer, Michael A. & Swallow, Stephen K. & Shogren, Jason F. & List, John A., 2009. "Rebate rules in threshold public good provision," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 798-806, June.
Abstract: This paper considers how six alternative rebate rules affect voluntary contributions in a threshold public-good experiment. The rules differ by (1) whether an individual can receive a proportional rebate of excess contributions, a winner-takes-all of any excess contributions, or a full rebate of one's contribution in the event the public good is provided and excess contributions exist, and (2) whether the probability of receiving a rebate is proportional to an individual's contribution relative to total contributions or is a simple uniform probability distribution set by the number of contributors. The paper adds to the existing experimental economics literature on threshold public goods by investigating both aggregate and individual demand revelation under the winner-take-all and random full-rebate rules. Half of the rules (proportional rebate, winner-take-all with uniform probability among all group members, and random full-rebate with uniform probability) provide total contributions that nearly equal total benefits, while the rest (winner-take-all with proportional probability, winner-take-all with uniform probability among contributors only, and random full-rebate with proportional probability) exceed benefits by over 30 percent. Only the proportional rebate rule is found to achieve both aggregate and individual demand revelation. Our experimental results have implications for both fundraisers and valuation practitioners.
Handle: RePEc:nbr:nberwo:14559
Template-Type: ReDIF-Paper 1.0
Title: Did Economics Cause World War II?
Classification-JEL: H56; N14; N24; N54; N64; N70; N74; N80; N84
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: EFG PR
Number: 14560
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14560
File-URL: http://www.nber.org/papers/w14560.pdf
File-Format: application/pdf
Abstract: Historians have long recognized the role of economic resources and organization in determining the outcome of World War II: the Nazi economy lacked the economic resources and organization to oppose the combined might of the U.S., U.K., and U.S.S.R. A minority view is that the Germans were defeated not by economics, but by Hitler's many strategic and tactical mistakes, of which the most important was the invasion of the Soviet Union. Compared to this debate about the outcome of the war, there has been less attention to economics as the cause of World War II. This is a review article of a new economic history of the Nazi economy by Adam Tooze which cuts through the debate between economics and Hitler's mistakes as fundamental causes of the outcome. Instead, Tooze argues that the invasion of the Soviet Union was the inevitable result of Hitler's paranoia about the land-starved backwardness of German agriculture as contrasted with the raw material and land resources of America's continent and Britain's empire. The American frontier expansion that obliterated the native Indians provided Hitler with a explicit precedent, which he often cited, for pushing aside the native populations in the east to provide land for German Aryan farmers. Germany's agricultural weakness is summarized by its low land-labor ratio, but Poland and the Ukraine had even less land per person. Thus simply acquiring the land to the east could not solve Germany's problem of low agricultural productivity without removing the native farming populations. Far better than other histories of the Third Reich, Tooze reveals the shocking details of General Plan Ost, the uber-holocaust which would have removed, largely through murder, as many as 45 million people from eastern agricultural land. Tooze, like the Nazis before him, fails to emphasize that the solution to Germany's agricultural problem was not acquiring more land for the existing German farm population, but rather by raising the land-labor ratio by making the existing German land more efficient, mechanizing agriculture and encouraging rural-to-urban migration within Germany.
Handle: RePEc:nbr:nberwo:14560
Template-Type: ReDIF-Paper 1.0
Title: Inflation Targeting and Real Exchange Rates in Emerging Markets
Classification-JEL: E52; E58; F15; F3
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Michael Hutchison
Author-Person: phu149
Author-Name: Ilan Noy
Author-Person: pno49
Note: IFM ITI ME
Number: 14561
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14561
File-URL: http://www.nber.org/papers/w14561.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Hutchison, Michael & Noy, Ilan, 2011. "Inflation Targeting and Real Exchange Rates in Emerging Markets," World Development, Elsevier, vol. 39(5), pages 712-724, May.
Abstract: We investigate inflation targeting (IT) in emerging markets, focusing on the role of the real exchange rate and the distinction between commodity and non-commodity exporters. IT emerging markets appear to follow a "mixed strategy" whereby both inflation and real exchange rates are important determinants of policy interest rates. The response to real exchange rates, however, is more constrained than in non-IT regimes. We also find that the response to real exchange rates is strongest in those countries following IT policies that are relatively intensive in exporting basic commodities; and present a theoretical model that explains these empirical results.
Handle: RePEc:nbr:nberwo:14561
Template-Type: ReDIF-Paper 1.0
Title: Sovereign Wealth Funds: Stylized Facts about their Determinants and Governance
Classification-JEL: E52; E58; F15; F3
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Reuven Glick
Author-Person: pgl13
Note: IFM ITI ME
Number: 14562
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14562
File-URL: http://www.nber.org/papers/w14562.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Reuven Glick, 2009. "Sovereign Wealth Funds: Stylized Facts about their Determinants and Governance," International Finance, Blackwell Publishing, vol. 12(3), pages 351-386, December.
Abstract: This paper presents statistical analysis supporting stylized facts about sovereign wealth funds (SWFs). It discusses the forces leading to the growth of SWFs, including the role of fuel exports and ongoing current account surpluses, and large hoarding of international reserves. It analyzes the degree to which measures of SWF governance and transparency compare with national norms of behavior. We provide evidence that many countries with SWFs are characterized by effective governance, but weak democratic institutions, as compared to other nonindustrial countries. We also present a model with which we compare the optimal degree of diversification abroad by a central bank versus that of a sovereign wealth fund. We show that if the central bank manages its foreign assets with the objective of reducing the probability of sudden stops, it will place a high weight on the downside risk of holding risky assets abroad and will tend to hold primarily safe foreign assets. In contrast, if the sovereign wealth fund, acting on behalf of the Treasury, maximizes the expected utility of a representative domestic agent, it will opt for relatively greater holding of more risky foreign assets. We discuss how the degree of a country's transparency may affect the size of the foreign asset base entrusted to a wealth fund's management, and show that, for relatively low levels of public foreign assets, assigning portfolio management independence to the central bank may be advantageous. However, for a large enough foreign asset base, the opportunity cost associated with the limited portfolio diversification of the central bank induces authorities to establish a wealth fund in pursuit of higher returns.
Handle: RePEc:nbr:nberwo:14562
Template-Type: ReDIF-Paper 1.0
Title: The Supply-Shock Explanation of the Great Stagflation Revisited
Classification-JEL: E3; N1
Author-Name: Alan S. Blinder
Author-Person: pbl41
Author-Name: Jeremy B. Rudd
Note: DAE EFG
Number: 14563
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14563
File-URL: http://www.nber.org/papers/w14563.pdf
File-Format: application/pdf
Publication-Status: published as The Supply-Shock Explanation of the Great Stagflation Revisited, Alan S. Blinder, Jeremy B. Rudd. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: U.S. inflation data exhibit two notable spikes into the double-digit range in 1973-1974 and again in 1978-1980. The well-known "supply-shock" explanation attributes both spikes to large food and energy shocks plus, in the case of 1973-1974, the removal of price controls. Yet critics of this explanation have (a) attributed the surges in inflation to monetary policy and (b) pointed to the far smaller impacts of more recent oil shocks as evidence against the supply-shock explanation. This paper reexamines the impacts of the supply shocks of the 1970s in the light of the new data, new events, new theories, and new econometric studies that have accumulated over the past quarter century. We find that the classic supply-shock explanation holds up very well; in particular, neither data revisions nor updated econometric estimates substantially change the evaluations of the 1972-1983 period that were made 25 years (or more) ago. We also rebut several variants of the claim that monetary policy, rather than supply shocks, was really to blame for the inflation spikes. Finally, we examine several changes in the economy that may explain why the impacts of oil shocks are so much smaller now than they were in the 1970s.
Handle: RePEc:nbr:nberwo:14563
Template-Type: ReDIF-Paper 1.0
Title: Short Run Impacts of Accountability on School Quality
Classification-JEL: H52; H75; I21; I28; L38
Author-Name: Jonah E. Rockoff
Author-Name: Lesley J. Turner
Author-Person: ptu137
Note: ED PE
Number: 14564
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14564
File-URL: http://www.nber.org/papers/w14564.pdf
File-Format: application/pdf
Publication-Status: published as Jonah Rockoff & Lesley J. Turner, 2010. "Short-Run Impacts of Accountability on School Quality," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 119-47, November.
Abstract: In November of 2007, the New York City Department of Education assigned elementary and middle schools a letter grade (A to F) under a new accountability system. Grades were based on numeric scores derived from student achievement and other school environmental factors such as attendance, and were linked to a system of rewards and consequences. We use the discontinuities in the assignment of grades to estimate the impact of accountability in the short run. Specifically, we examine student achievement in English Language Arts and mathematics (measured in January and March of 2008, respectively) using school level aggregate data. Although schools had only a few months to respond to the release of accountability grades, we find that receipt of a low grade significantly increased student achievement in both subjects, with larger effects in math. We find no evidence that these grades were related to the percentage of students tested, implying that accountability can cause real changes in school quality that increase student achievement over a short time horizon. We also find that parental evaluations of educational quality improved for schools receiving low accountability grades. However, changes in survey response rates hold open the possibility of selection bias in these complementary results.
Handle: RePEc:nbr:nberwo:14564
Template-Type: ReDIF-Paper 1.0
Title: International Trade in Used Durable Goods: The Environmental Consequences of NAFTA
Classification-JEL: F18
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE IO ITI
Number: 14565
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14565
File-URL: http://www.nber.org/papers/w14565.pdf
File-Format: application/pdf
Publication-Status: published as American Economic Journal: Economic Policy, 2010, 2(4), 58-82.
Abstract: Previous studies of trade and the environment overwhelmingly focus on how trade affects where goods are produced. However, trade also affects where goods are consumed. In this paper we describe a model of trade with durable goods and non-homothetic preferences. In autarky, low-quality (used) goods are relatively inexpensive in high-income countries and free trade causes these goods to be exported to low-income countries. We then evaluate the environmental consequences of this pattern of trade using evidence from the North American Free Trade Agreement. Since trade restrictions were eliminated for used cars in 2005, over 2.5 million used cars have been exported from the United States to Mexico. Using a unique, vehicle-level dataset, we find that traded vehicles are dirtier than the stock of vehicles in the United States and cleaner than the stock in Mexico, so trade leads average vehicle emissions to decrease in both countries. Total greenhouse gas emissions increase, primarily because trade gives new life to vehicles that otherwise would have been scrapped.
Handle: RePEc:nbr:nberwo:14565
Template-Type: ReDIF-Paper 1.0
Title: The Timing of Labor Demand
Classification-JEL: J23; J78
Author-Name: Ana Rute Cardoso
Author-Person: pca97
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: José Varejão
Author-Person: pva346
Note: LS
Number: 14566
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14566
File-URL: http://www.nber.org/papers/w14566.pdf
File-Format: application/pdf
Publication-Status: published as A. Cardoso, D. Hamermesh, J. Varejao. Annales d’économie et de statistique. Number 105/106 – Jan/Jun 2012 pp 15-34
Publication-Status: published as Ana Rute Cardoso & Daniel S. Hamermesh & José Varejão, 2012. "The Timing of Labor Demand," Annals of Economics and Statistics, .
Abstract: We examine the timing of firms' operations in a formal model of labor demand. Merging a variety of data sets from Portugal from 1995-2004, we describe temporal patterns of firms' demand for labor and estimate production-functions and relative labor-demand equations. The results demonstrate the existence of substitution of employment across times of the day/week and show that legislated penalties for work at irregular hours induce firms to alter their operating schedules. The results suggest a role for such penalties in an unregulated labor market, such as the United States, in which unusually large fractions of work are performed at night and on weekends.
Handle: RePEc:nbr:nberwo:14566
Template-Type: ReDIF-Paper 1.0
Title: Pharmaceutical Industry, Drug Quality and Regulation: Evidence from US and Italy
Classification-JEL: I1; L51; L65
Author-Name: Vincenzo Atella
Author-Person: pat37
Author-Name: Jay Bhattacharya
Author-Name: Lorenzo Carbonari
Author-Person: pca257
Note: EH
Number: 14567
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14567
File-URL: http://www.nber.org/papers/w14567.pdf
File-Format: application/pdf
Publication-Status: published as Pharmaceutical industry, drug quality and regulation.Evidence from US and Italy Journal Article Authors Vincenzo Atella - Stanford University Jay Bhattacharya - Stanford University Carbonari, L. Published by Health Service Research, Vol. 47 no. 1 pt 1, page(s) 293-308 February 2012
Abstract: This paper examines the relationship between drug price and drug quality and how it varies across two of the most common regulatory regimes in the pharmaceutical market: minimum efficacy standards (MES) and a mix of minimum efficacy standards and price control mechanisms (MES+PC). Through a simple model of adverse selection we model the interaction between firms, heterogeneous buyers and the regulator. The theoretical analysis provides two results. First, an MES regime provides greater incentives to produce high quality drugs. Second, an MES+PC mix reduces the difference in price between the highest and lowest quality drugs on the market. The empirical analysis based on US and Italian data corroborates these results.
Handle: RePEc:nbr:nberwo:14567
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Primary Care Doctors
Classification-JEL: I18; J24; J44
Author-Name: Sherry A. Glied
Author-Name: Ashwin Prabhu
Author-Name: Norman H. Edelman
Note: EH LS
Number: 14568
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14568
File-URL: http://www.nber.org/papers/w14568.pdf
File-Format: application/pdf
Publication-Status: published as Sherry Glied & Ashwin G. Prabhu & Norman Edelman, 2009. "The Cost of Primary Care Doctors," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 12(1).
Publication-Status: published as The Cost of Primary Care Doctors, Sherry Glied, Ashwin G. Prabhu, Norman Edelman. in Frontiers in Health Policy Research, volume 12, Cutler, Garber, and Goldman. 2008
Abstract: This study uses a human capital model to estimate the societal cost of producing a physician service. Physician human capital consists of the underlying human capital (productivity) of those who become physicians and the job-specific investments (physician training) added to this underlying capital. The value of physicians' underlying human capital is estimated by forecasting an age-earnings profile for doctors based on the characteristics in youth of NLSY cohort participants who subsequently became doctors. Published estimates are used to measure the total cost (wherever paid) of investments in physician training. These data are combined to compute the societal cost per primary care physician visit. The estimated societal cost per primary care physician visit is much higher than the average co-payment per primary care service and generally higher than the current Medicare compensation rate per service unit The private return to primary care physician training is relatively low, in the range of 7-9%. At current levels of supply, the marginal social costs of primary care visits appear to be equal to or greater than marginal social benefits.
Handle: RePEc:nbr:nberwo:14568
Template-Type: ReDIF-Paper 1.0
Title: An Historical Perspective on the Crisis of 2007-2008
Classification-JEL: N10
Author-Name: Michael D. Bordo
Author-Person: pbo243
Note: ME
Number: 14569
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14569
File-URL: http://www.nber.org/papers/w14569.pdf
File-Format: application/pdf
Abstract: This paper provides an historical perspective on the crisis of 2007-2008. The crisis is part of a perennial pattern. It has echoes in earlier big international financial crises which were triggered by events in the U.S. financial system. Examples include the crises of 1857, 1893 1907 and 1929-33. This crisis has many similarities to those of the past but also some important modern twists.
Handle: RePEc:nbr:nberwo:14569
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Housing Assistance on Labor Supply: Evidence from a Voucher Lottery
Classification-JEL: I38; J22
Author-Name: Brian A. Jacob
Author-Name: Jens Ludwig
Note: CH ED LS PE
Number: 14570
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14570
File-URL: http://www.nber.org/papers/w14570.pdf
File-Format: application/pdf
Publication-Status: published as Jacob, Brian A., and Jens Ludwig. 2012. "The Effects of Housing Assistance on Labor Supply: Evidence from a Voucher Lottery." American Economic Review, 102(1): 272-304. DOI: 10.1257/aer.102.1.272
Publication-Status: published as Brian A Jacob & Jens Ludwig, 2012. "The Effects of Housing Assistance on Labor Supply: Evidence from a Voucher Lottery," American Economic Review, vol 102(1), pages 272-304.
Abstract: This study estimates the effects of means-tested housing programs on labor supply using data from a randomized housing voucher wait-list lottery in Chicago. Evidence for the net effects of housing programs on labor supply is central to a wide range of policy decisions about how to provide housing assistance to the poor. Economic theory is ambiguous about the expected sign of any labor supply response. We find that among working-age, able-bodied adults, housing voucher use reduces quarterly labor force participation rates by 4 percentage points (6 percent of the control complier mean) and quarterly earnings by $285 (10 percent), and increases social program participation rates by 2 percentage points (16 percent of the control mean). These impacts are toward the lower end of the range of recent estimates from other studies of housing programs, but nonetheless do still imply that housing vouchers reduce labor supply.
Handle: RePEc:nbr:nberwo:14570
Template-Type: ReDIF-Paper 1.0
Title: Forecasting Stock Market Returns: The Sum of the Parts is More than the Whole
Classification-JEL: G1; G17
Author-Name: Miguel A. Ferreira
Author-Person: pfe454
Author-Name: Pedro Santa-Clara
Author-Person: psa1486
Note: AP
Number: 14571
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14571
File-URL: http://www.nber.org/papers/w14571.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 100, Issue 3, June 2011, Pages 514–537 Cover image Forecasting stock market returns: The sum of the parts is more than the whole ☆ Miguel A. Ferreiraa, b, Pedro Santa-Claraa, c, Corresponding author contact information, E-mail the corresponding author
Abstract: We propose forecasting separately the three components of stock market returns: dividend yield, earnings growth, and price-earnings ratio growth. We obtain out-of-sample R-square coefficients (relative to the historical mean) of nearly 1.6% with monthly data and 16.7% with yearly data using the most common predictors suggested in the literature. This compares with typically negative R-squares obtained in a similar experiment by Goyal and Welch (2008). An investor who timed the market with our approach would have had a certainty equivalent gain of as much as 2.3% per year and a Sharpe ratio 77% higher relative to the historical mean. We conclude that there is substantial predictability in equity returns and that it would have been possible to time the market in real time.
Handle: RePEc:nbr:nberwo:14571
Template-Type: ReDIF-Paper 1.0
Title: Are Health Insurance Markets Competitive?
Classification-JEL: I1; L1
Author-Name: Leemore Dafny
Note: EH IO
Number: 14572
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14572
File-URL: http://www.nber.org/papers/w14572.pdf
File-Format: application/pdf
Publication-Status: published as Dafny, Leemore S. 2010. "Are Health Insurance Markets Competitive?" American Economic Review, 100(4): 1399-1431. DOI: 10.1257/aer.100.4.1399
Publication-Status: published as Leemore S Dafny, 2010. "Are Health Insurance Markets Competitive?," American Economic Review, vol 100(4), pages 1399-1431.
Abstract: Although the vast majority of Americans have private health insurance, researchers focus almost exclusively on public provision. Data on the private insurance sector is extremely difficult to obtain because health insurance contracts are complex, renegotiated annually, and not subject to reporting requirements. This study makes use of a privately-gathered national database of insurance contracts agreed upon by a sample of large, multisite employers between 1998 and 2005. To gauge the competitiveness of the group health insurance industry, I investigate whether health insurers charge higher premiums, ceteris paribus, to more profitable firms. I find they do, and this result is not driven by cross-sectional differences across firms or plans: firms with positive profit shocks subsequently face higher premium growth, even for the same healthplans. Moreover, this relationship is strongest in geographic markets served by a small number of insurance carriers. Further analysis suggests profits act to increase employers' switching costs, and insurers exploit this inelasticity where they have sufficient bargaining power. Given the rapid industry consolidation during the study period, these findings suggest healthcare insurers possess and exercise market power in an increasing number of geographic markets.
Handle: RePEc:nbr:nberwo:14572
Template-Type: ReDIF-Paper 1.0
Title: Season of Birth and Later Outcomes: Old Questions, New Answers
Classification-JEL: C10; J11; J13
Author-Name: Kasey Buckles
Author-Person: pbu157
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Note: CH AG EH LS
Number: 14573
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14573
File-URL: http://www.nber.org/papers/w14573.pdf
File-Format: application/pdf
Publication-Status: published as Kasey S. Buckles & Daniel M. Hungerman, 2013. "Season of Birth and Later Outcomes: Old Questions, New Answers," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 711-724, July.
Abstract: Research has found that season of birth is associated with later health and professional outcomes; what drives this association remains unclear. In this paper we consider a new explanation: that children born at different times in the year are conceived by women with different socioeconomic characteristics. We document large seasonal changes in the characteristics of women giving birth throughout the year in the United States. Children born in the winter are disproportionally born to women who are more likely to be teenagers and less likely to be married or have a high school degree. We show that controls for family background characteristics can explain up to half of the relationship between season of birth and adult outcomes. We then discuss the implications of this result for using season of birth as an instrumental variable; our findings suggest that, though popular, season-of-birth instruments may produce inconsistent estimates. Finally, we find that some of the seasonality in maternal characteristics is due to summer weather differentially affecting fertility patterns across socioeconomic groups.
Handle: RePEc:nbr:nberwo:14573
Template-Type: ReDIF-Paper 1.0
Title: Delegated Asset Management, Investment Mandates, and Capital Immobility
Classification-JEL: G01; G20
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF
Number: 14574
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14574
File-URL: http://www.nber.org/papers/w14574.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 107, Issue 2, February 2013, Pages 239–258 Cover image Delegated asset management, investment mandates, and capital immobility ☆ Zhiguo Hea, b, E-mail the corresponding author, Wei Xiongc, b, Corresponding author contact information, E-mail the corresponding author
Abstract: This paper develops a model to explain the widely used investment mandates in the institutional asset management industry based on two insights: First, giving a manager more investment flexibility weakens the link between fund performance and his effort in the designated market, and thus increases agency cost. Second, the presence of outside assets with negatively skewed returns can further increase the agency cost if the manager is incentivized to pursue outside opportunities. These effects motivate narrow mandates and tight tracking error constraints to most fund managers except those with exceptional talents. Our model sheds light on capital immobility and market segmentation that are widely observed in financial markets, and highlights important effects of negatively skewed risk on institutional incentive structures.
Handle: RePEc:nbr:nberwo:14574
Template-Type: ReDIF-Paper 1.0
Title: The NBER-Rensselaer Scientific Papers Database: Form, Nature, and Function
Classification-JEL: D2; O3
Author-Name: James D. Adams
Author-Person: pad11
Author-Name: J. Roger Clemmons
Note: PR
Number: 14575
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14575
File-URL: http://www.nber.org/papers/w14575.pdf
File-Format: application/pdf
Abstract: This article is a guide to the NBER-Rensselaer Scientific Papers Database, which includes more than 2.5 million scientific publications and over 21 million citations to those papers. The data cover an important sample of 110 top U.S. universities and 200 top U.S.-based R&D-performing firms during the period 1981-1999. This article describes the file system which comprises the database, explains the variables included in the files, and discusses the functions of the various files. It includes numerous descriptive tables, as well as graphs of the data in the time series dimension. In addition, it discusses limitations and strengths of the data as well as some questions that the data might be used to address.
Handle: RePEc:nbr:nberwo:14575
Template-Type: ReDIF-Paper 1.0
Title: Evidence of Improved Monitoring and Insolvency Resolution after FDICIA
Classification-JEL: G21; G28; P51
Author-Name: Edward J. Kane
Author-Person: pka853
Author-Name: Rosalind Bennett
Author-Person: pbe983
Author-Name: Robert Oshinsky
Note: CF
Number: 14576
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14576
File-URL: http://www.nber.org/papers/w14576.pdf
File-Format: application/pdf
Abstract: To realign supervisory and market incentives, the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) adjusts two principal features of federal banking supervision. First, it requires regulators to examine insured institutions more frequently and makes them accountable for exercising their supervisory powers. Second, the Act empowers regulators to wind up the affairs of troubled institutions before their accounting net worth is exhausted. Using 1984-2003 data on the outcome of individual bank examinations, this paper documents that the frequency of rating transitions and the character of insolvency resolutions have changed substantially under FDICIA. The average interval between bank examinations has dropped for low-rated banks in the post-FDICIA era. Examiner upgrades have become significantly more likely in the post-FDICIA era even after controlling for the state of the economy. However, in recessions managers are slower to correct problems that examiners identify. As a result, during downturns upgrades become less likely and absorptions become more likely. Giving the FDIC authority to wind up troubled banks before their tangible net worth is exhausted has reduced the role of government in the insolvency-resolution process. Consistent with an hypothesis that FDICIA has improved incentives, our data show that a markedly larger percentage of troubled banks now search for a merger partner rather than trying to stay in business until the regulators force them to fail. This greater reliance on quasi-voluntary mergers is observable both within and across various stages of the business cycle. These findings suggest that supervisory interventions became more effective at banks during the post-FDICIA era.
Handle: RePEc:nbr:nberwo:14576
Template-Type: ReDIF-Paper 1.0
Title: Superstar Extinction
Classification-JEL: O3; O31; O43
Author-Name: Pierre Azoulay
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Jialan Wang
Author-Person: pwa486
Note: PR
Number: 14577
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14577
File-URL: http://www.nber.org/papers/w14577.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Joshua S. Graff Zivin & Jialan Wang, 2010. "Superstar Extinction," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 549-589, May.
Abstract: We estimate the magnitude of spillovers generated by 112 academic "superstars" who died pre- maturely and unexpectedly, thus providing an exogenous source of variation in the structure of their collaborators' coauthorship networks. Following the death of a superstar, we find that collaborators experience, on average, a lasting 5 to 8% decline in their quality-adjusted publication rates. By exploring interactions of the treatment effect with a variety of star, coauthor and star/coauthor dyad characteristics, we seek to adjudicate between plausible mechanisms that might explain this finding. Taken together, our results suggest that spillovers are circumscribed in idea space, but less so in physical or social space. In particular, superstar extinction reveals the boundaries of the scientific field to which the star contributes -- the "invisible college."
Handle: RePEc:nbr:nberwo:14577
Template-Type: ReDIF-Paper 1.0
Title: The First of the Month Effect: Consumer Behavior and Store Responses
Classification-JEL: H0; H2; H31; H32; L1
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Ebonya L. Washington
Note: IO PE
Number: 14578
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14578
File-URL: http://www.nber.org/papers/w14578.pdf
File-Format: application/pdf
Publication-Status: published as Justine Hastings & Ebonya Washington, 2010. "The First of the Month Effect: Consumer Behavior and Store Responses," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 142-62, May.
Publication-Status: published as The First of the Month Effect: Consumer Behavior and Store Responses, Justine Hastings, Ebonya Washington. in Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), Gordon and Piketty. 2010
Abstract: Previous research has used survey and diary data to carefully document that Food Stamp recipients decrease their expenditures and consumption of food throughout the benefit month, the beginning of which is defined by the date on which benefits are distributed. The reliance on survey and diary data has meant that researchers could not test two rational hypotheses for why food consumption cycles. Using detailed grocery store scanner data we ask 1) whether cycling is due to a desire for variation in foods consumed that leads to substitution across product quality within the month and 2) whether cycling is driven by countercyclical pricing by grocery retailers. We find support for neither of these hypotheses. We find that the decrease in food expenditures is largely driven by reductions in food quantity, not quality, and that prices for foods purchased by benefit households vary pro-cyclically with demand implying that benefit households could save money by delaying their food purchases until later in the month. The price effects are small relative to demand changes and relative to impacts found for other subsidy programs such as EITC, suggesting that most of the benefits accrue to the intended recipients particularly in product categories and stores where benefit recipients represent a small fraction of overall demand. We conclude by concurring with previous literature that food cycling behavior is most likely due to short-run impatience.
Handle: RePEc:nbr:nberwo:14578
Template-Type: ReDIF-Paper 1.0
Title: The Flypaper Effect
Classification-JEL: H72; H77; P16
Author-Name: Robert P. Inman
Note: PE POL
Number: 14579
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14579
File-URL: http://www.nber.org/papers/w14579.pdf
File-Format: application/pdf
Abstract: The flypaper effect results when a dollar of exogenous grants-in-aid leads to significantly greater public spending than an equivalent dollar of citizen income: Money sticks where it hits. Viewing governments as agents for a representative citizen voter, this empirical result is an anomaly. Four alternative explanations have been offered. First, it's a data problem; matching grants have been mis-classified as exogenous aid. Second, it's an econometric problem; exogenous aid is correlated with omitted variables leading to a downward bias in estimates of income's effects and an upward bias in estimates of aid's effects. Third, it's a specification problem: the representative citizen either fails to observe lump-sum aid, or sees aid but mis-perceives its impact as an average price effect, or finally, sees and understands aid's budgetary effects but allocates "public" and "private" monies through separate "mental accounts." The empirical evidence suggests none of these explanations is sufficient. A fourth explanation seems most promising: It's politics. Rather than an anomaly, the flypaper effect is best seen as an outcome of political institutions and the associated incentives of elected officials.
Handle: RePEc:nbr:nberwo:14579
Template-Type: ReDIF-Paper 1.0
Title: Why Aren't Developed Countries Saving?
Classification-JEL: E21
Author-Name: Loretti I. Dobrescu
Author-Person: pdo152
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Alberto F. Motta
Author-Person: pmo373
Note: AG ME PE POL PR
Number: 14580
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14580
File-URL: http://www.nber.org/papers/w14580.pdf
File-Format: application/pdf
Publication-Status: published as Dobrescu, Loretti I. & Kotlikoff, Laurence J. & Motta, Alberto, 2012. "Why aren't developed countries saving?," European Economic Review, Elsevier, vol. 56(6), pages 1261-1275.
Abstract: National saving rates differ enormously across developed countries. But these differences obscure a common trend, namely a dramatic decline over time. France and Italy, for example, saved over 17 percent of national income in 1970, but less than 7 percent in 2006. Japan saved 30 percent in 1970, but only 8 percent in 2006. And the U.S. saved 9 percent in 1970, but only 2 percent in 2006. What explains these international and intertemporal differences? Is it demographics, government spending, productivity growth or preferences? Our answer is preferences. Developed societies are placing increasing weight on the welfare of those currently alive, particularly contemporaneous older generations. This conclusion emerges from estimating two models in which society makes consumption and labor supply decisions in light of uncertainty over future government spending, productivity, and social preferences. The two models differ in terms of the nature of preference uncertainty and the extent to which current society can control future societies' spending and labor supply decisions.
Handle: RePEc:nbr:nberwo:14580
Template-Type: ReDIF-Paper 1.0
Title: Equity Depletion from Government-Guaranteed Debt
Classification-JEL: E32; E58; G18; G32
Author-Name: Robert E. Hall
Note: EFG
Number: 14581
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14581
File-URL: http://www.nber.org/papers/w14581.pdf
File-Format: application/pdf
Publication-Status: published as Equity Depletion from Government-Guaranteed Debt, December 2008, published as Chapter 7 of Forward-Looking Decision Making, titled “Financial Stability with Government-Guaranteed Debt.”
Abstract: Government guarantees of private debt deplete equity. The depletion is greatest during periods when the probability of a guarantee payoff is highest. In a setting otherwise subject to Modigliani-Miller neutrality, firms issue guaranteed debt up to the limit the government permits. Declines in asset values raise debt in relation to asset values and thus deplete equity directly, under the realistic assumption that the government is unable to enforce rules calling for marking asset values to market. Less widely recognized is that guaranteed debt creates an incentive to pay equity out to owners -- such a payout lowers the value of the firm's call option on its assets by less than the amount of the payout. I build a simple dynamic equilibrium model of an economy that would have a constant consumption/capital ratio but for debt guarantees. Exogenous changes in asset values cause major swings in allocations as participants respond to changing incentives. Periods when default is unusually likely because asset values have fallen are times of abnormally high consumption/capital ratios. The withdrawal of equity from firms to pay for the consumption will turn out to be free on the margin if the firm defaults. Consumers concentrate their consumption during the periods when consumption is cheap. Because these periods are transitory, they generate expectations of negative consumption growth, which implies that interest rates are low. Thus guarantees generate substantial volatility throughout the economy.
Handle: RePEc:nbr:nberwo:14581
Template-Type: ReDIF-Paper 1.0
Title: The Value of Making Commitments Externally: Evidence from WTO Accessions
Classification-JEL: F1; F5; O4
Author-Name: Man-Keung Tang
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM ITI
Number: 14582
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14582
File-URL: http://www.nber.org/papers/w14582.pdf
File-Format: application/pdf
Publication-Status: published as Tang, Man-Keung & Wei, Shang-Jin, 2009. "The value of making commitments externally: Evidence from WTO accessions," Journal of International Economics, Elsevier, vol. 78(2), pages 216-229, July.
Abstract: This paper studies the value of external commitment to policy reforms in the case of WTO/GATT accessions. The accessions often entail reforms that go beyond narrowly defined trade liberalization, and have to overcome fierce resistance in the acceding countries, as reflected in protracted negotiations. We study the growth and investment consequences of WTO/GATT accessions, with attention to a possible selection bias. We find that the accessions tend to raise income , but only for those countries that were subject to rigorous accession procedures. Policy commitments associated with the accessions were helpful, especially for countries with poor governance.
Handle: RePEc:nbr:nberwo:14582
Template-Type: ReDIF-Paper 1.0
Title: Individual Investor Mutual-Fund Flows
Classification-JEL: C41; D14; G11; H20
Author-Name: Zoran Ivkovich
Author-Name: Scott Weisbenner
Note: PE
Number: 14583
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14583
File-URL: http://www.nber.org/papers/w14583.pdf
File-Format: application/pdf
Publication-Status: published as “Individual Investor Mutual Fund Flows,” (with Zoran Ivković), Journal of Financial Economics, VoNol. 92, . 2, 2009, p. 223-237.
Abstract: This paper studies the relation between individuals' mutual fund flows and fund characteristics, establishing three key results. First, consistent with tax motivations, individual investors are reluctant to sell mutual funds that have appreciated in value and are willing to sell losing funds. Second, individuals pay attention to investment costs as redemption decisions are sensitive to both expense ratios and loads. Third, individuals' fund-level inflows and outflows are sensitive to performance, but in different ways. Inflows are related only to "relative" performance, suggesting that new money chases the best performers in an objective. Outflows are related only to "absolute" fund performance, the relevant benchmark for taxes.
Handle: RePEc:nbr:nberwo:14583
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Policy, Wealth Effects, and Markups
Classification-JEL: D91; E21; E62
Author-Name: Tommaso Monacelli
Author-Person: pmo32
Author-Name: Roberto Perotti
Author-Person: ppe66
Note: EFG POL
Number: 14584
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14584
File-URL: http://www.nber.org/papers/w14584.pdf
File-Format: application/pdf
Abstract: We document that variations in government purchases generate a rise in consumption, the real and the product wage, and a fall in the markup. This evidence is robust across alternative empirical methodologies used to identify innovations in government spending (structural VAR vs. narrative approach). Simultaneously accounting for these facts is a formidable challenge for a neoclassical model, which relies on the wealth effect on labor supply as the main channel of transmission of unproductive government spending shocks. The goal of this paper is to explore further the role of the wealth effects in the transmission of government spending shocks. To this end, we build an otherwise standard business cycle model with price rigidity, in which preferences can be consistent with an arbitrarily small wealth effect on labor supply, and highlight that such effect is linked to the degree of complementarity between consumption and hours. We show that the model is able to match our empirical evidence on the effects of government spending shocks remarkably well. This happens when the preferences are such that the positive wealth effect on labor supply is small and therefore the negative wealth effect on consumption is, somewhat counterintuitively, large.
Handle: RePEc:nbr:nberwo:14584
Template-Type: ReDIF-Paper 1.0
Title: The Incidence of Civil War: Theory and Evidence
Classification-JEL: D74; F52; O11; Q54
Author-Name: Timothy J. Besley
Author-Person: pbe46
Author-Name: Torsten Persson
Author-Person: ppe28
Note: IFM POL
Number: 14585
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14585
File-URL: http://www.nber.org/papers/w14585.pdf
File-Format: application/pdf
Abstract: This paper studies the incidence of civil war over time. We put forward a canonical model of civil war, which relates the incidence of conflict to circumstances, institutions and features of the underlying economy and polity. We use this model to derive testable predictions and to interpret the cross-sectional and times-series variations in civil conflict. Our most novel emprical finding is that higher world market prices of exported, as well as imported, commodities are strong and significant predictors of higher within-country incidence of civil war.
Handle: RePEc:nbr:nberwo:14585
Template-Type: ReDIF-Paper 1.0
Title: What Can Survey Forecasts Tell Us About Informational Rigidities?
Classification-JEL: D84; E3; E4; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG ME
Number: 14586
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14586
File-URL: http://www.nber.org/papers/w14586.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko, 2012. "What Can Survey Forecasts Tell Us about Information Rigidities?," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 116 - 159.
Abstract: This paper uses three different surveys of economic forecasts to assess both the support for and the properties of informational rigidities faced by agents. Specifically, we track the impulse responses of mean forecast errors and disagreement among agents after exogenous structural shocks. Our key contribution is to document that in response to structural shocks, mean forecasts fail to completely adjust on impact, leading to statistically and economically significant deviations from the null of full information: the half life of forecast errors is roughly between 6 months and a year. Importantly, the dynamic process followed by forecast errors following structural shocks is consistent with the predictions of models of informational rigidities. We interpret this finding as providing support for the recent expansion of research into models of informational rigidities. In addition, we document several stylized facts about the conditional responses of forecast errors and disagreement among agents that can be used to differentiate between some of the models of informational rigidities recently proposed.
Handle: RePEc:nbr:nberwo:14586
Template-Type: ReDIF-Paper 1.0
Title: Banking Crises: An Equal Opportunity Menace
Classification-JEL: E6; F3; N0
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM
Number: 14587
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14587
File-URL: http://www.nber.org/papers/w14587.pdf
File-Format: application/pdf
Publication-Status: published as Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
Abstract: The historical frequency of banking crises is quite similar in high- and middle-to-low-income countries, with quantitative and qualitative parallels in both the run-ups and the aftermath. We establish these regularities using a unique dataset spanning from Denmark's financial panic during the Napoleonic War to the ongoing global financial crisis sparked by subprime mortgage defaults in the United States. Banking crises dramatically weaken fiscal positions in both groups, with government revenues invariably contracting, and fiscal expenditures often expanding sharply. Three years after a financial crisis central government debt increases, on average, by about 86 percent. Thus the fiscal burden of banking crisis extends far beyond the commonly cited cost of the bailouts. Our new dataset includes housing price data for emerging markets; these allow us to show that the real estate price cycles around banking crises are similar in duration and amplitude to those in advanced economies, with the busts averaging four to six years. Corroborating earlier work, we find that systemic banking crises are typically preceded by asset price bubbles, large capital inflows and credit booms, in rich and poor countries alike.
Handle: RePEc:nbr:nberwo:14587
Template-Type: ReDIF-Paper 1.0
Title: The Use of Full-line Forcing Contracts in the Video Rental Industry
Classification-JEL: L0
Author-Name: Justin Ho
Author-Name: Katherine Ho
Author-Person: pho493
Author-Name: Julie Holland Mortimer
Author-Person: pmo678
Note: IO
Number: 14588
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14588
File-URL: http://www.nber.org/papers/w14588.pdf
File-Format: application/pdf
Publication-Status: published as Katherine Ho & Justin Ho & Julie Holland Mortimer, 2012. "The Use of Full-Line Forcing Contracts in the Video Rental Industry," American Economic Review, American Economic Association, vol. 102(2), pages 686-719, April.
Abstract: We provide an empirical study of bundling in a supply chain, referred to as fullline forcing. We use an extensive dataset on contracts between video retailers and movie distributors to analyze the choices made on both sides of the market: which distributors offer full-line forcing contracts, which retailers take them up, and whether their decisions are profitable. Most large distributors offer full-line forcing contracts in our data. Our simulations indicate that their choices of which contracts to offer are profit-maximizing. However, many retailers prefer to utilize linear pricing contracts even when our model indicates that this may not be profit-maximizing.
Handle: RePEc:nbr:nberwo:14588
Template-Type: ReDIF-Paper 1.0
Title: Well-being and Trust in the Workplace
Classification-JEL: I31; J16; J31; J51
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Haifang Huang
Author-Person: phu198
Note: LS
Number: 14589
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14589
File-URL: http://www.nber.org/papers/w14589.pdf
File-Format: application/pdf
Publication-Status: published as John Helliwell & Haifang Huang, 2011. "Well-Being and Trust in the Workplace," Journal of Happiness Studies, Springer, vol. 12(5), pages 747-767, October.
Abstract: This paper summarizes and extends our recent work using life satisfaction regressions to estimate the relative values of financial and non-financial job characteristics. The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of social capital in workplaces. For example, an increase of trust in management that is about one tenth of the scale is equivalent to more than 30% increase in monetary income. We find that these values differ significantly by gender and by union status. We consider the reasons for such large values, and explore their implications for employers, employees, and policy-makers.
Handle: RePEc:nbr:nberwo:14589
Template-Type: ReDIF-Paper 1.0
Title: Comparing Open and Sealed Bid Auctions: Evidence from Timber Auctions
Classification-JEL: D44; D82; L13; L40
Author-Name: Susan Athey
Author-Person: pat6
Author-Name: Jonathan Levin
Author-Person: ple318
Author-Name: Enrique Seira
Note: IO
Number: 14590
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14590
File-URL: http://www.nber.org/papers/w14590.pdf
File-Format: application/pdf
Publication-Status: published as Susan Athey & Jonathan Levin & Enrique Seira, 2011. "Comparing open and Sealed Bid Auctions: Evidence from Timber Auctions," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 207-257.
Abstract: We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic effects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We show that a private value auction model with endogenous participation can account for these qualitative effects of auction format. We estimate the model's parameters and show that it can explain the quantitative effects as well. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice.
Handle: RePEc:nbr:nberwo:14590
Template-Type: ReDIF-Paper 1.0
Title: Re-examining the Effects of Medicaid Expansions for Pregnant Women
Classification-JEL: I11; I12; I18; I28; I38
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Sandra Decker
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: CH EH PE
Number: 14591
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14591
File-URL: http://www.nber.org/papers/w14591.pdf
File-Format: application/pdf
Abstract: This paper analyzes the effect of Medicaid eligibility expansions on the health insurance coverage of women giving birth and on the use of prenatal care and infant health, controlling for year and state effects and state-specific trends that may be correlated with expansions in Medicaid eligibility. We combine estimates from the two sets of analyses to construct estimates of the effect of health insurance on use of prenatal care and infant health. We find that the eligibility expansions reduced the proportion of pregnant women who were uninsured by approximately 10 percent, although this decrease in uninsured came with the expense of a substantial reduction in private insurance coverage. Changes in Medicaid eligibility were associated with very small and statistically insignificant changes in prenatal care use, birth weight, and incidence of low-birth weight.
Handle: RePEc:nbr:nberwo:14591
Template-Type: ReDIF-Paper 1.0
Title: Brain Drain or Brain Bank? The Impact of Skilled Emigration on Poor-Country Innovation
Classification-JEL: O3; O33
Author-Name: Ajay Agrawal
Author-Person: pag38
Author-Name: Devesh Kapur
Author-Name: John McHale
Author-Person: pmc145
Note: PR
Number: 14592
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14592
File-URL: http://www.nber.org/papers/w14592.pdf
File-Format: application/pdf
Publication-Status: published as Agrawal, Ajay & Kapur, Devesh & McHale, John & Oettl, Alexander, 2011. "Brain drain or brain bank? The impact of skilled emigration on poor-country innovation," Journal of Urban Economics, Elsevier, vol. 69(1), pages 43-55, January.
Abstract: The development prospects of a poor country depend in part on its capacity for innovation. The productivity of its innovators depends in turn on their access to technological knowledge. The emigration of highly skilled individuals weakens local knowledge networks (brain drain), but may also help remaining innovators access valuable knowledge accumulated abroad (brain bank). We develop a model in which the size of the optimal innovator diaspora depends on the competing strengths of co-location and diaspora effects for accessing knowledge. Then, using patent citation data associated with inventions from India, we estimate the key co-location and diaspora parameters; the net effect of innovator emigration is to harm domestic knowledge access, on average. However, knowledge access conferred by the diaspora is particularly valuable in the production of India's most important inventions as measured by citations received. Thus, our findings imply that the optimal emigration level may depend, at least partly, on the relative value resulting from the most cited compared to average inventions.
Handle: RePEc:nbr:nberwo:14592
Template-Type: ReDIF-Paper 1.0
Title: Empathy and Emulation: Life Satisfaction and the Urban Geography of Comparison Groups
Classification-JEL: D6; H0; J0; R0
Author-Name: Christopher P. Barrington-Leigh
Author-Person: pba821
Author-Name: John F. Helliwell
Author-Person: phe368
Note: PE
Number: 14593
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14593
File-URL: http://www.nber.org/papers/w14593.pdf
File-Format: application/pdf
Abstract: Departures from self-centred, consumption-oriented decision making are increasingly common in economic theory and are well motivated by a wide range of behavioural data from experiments, surveys, and econometric inference. A number of studies have shown large negative externalities in individual subjective well-being due to neighbours' incomes. These reflect the role of nearby households as comparison groups acting in individuals' reference-dependent preferences over income or consumption. At the same time, there are many reasons to expect positive spillovers from having prosperous neighbours. We combine high-resolution geographic data from three Canada-wide social surveys and the 2001 census to disentangle the spatial pattern of reference groups in urban areas and to identify channels of positive and negative spillovers on life satisfaction. We find evidence of significant effects of others' income at different scales and are able to reject a number of alternative explanations for the findings.
Handle: RePEc:nbr:nberwo:14593
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Productivity in SMEs: Empirical Evidence for Italy
Classification-JEL: D24; L25; L26; O30; O32
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Francesca Lotti
Author-Person: plo19
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: IO PR
Number: 14594
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14594
File-URL: http://www.nber.org/papers/w14594.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn Hall & Francesca Lotti & Jacques Mairesse, 2009. "Innovation and productivity in SMEs: empirical evidence for Italy," Small Business Economics, Springer, vol. 33(1), pages 13-33, June.
Abstract: Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture. Therefore, in this paper, we develop a structural model of innovation which incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures. We then apply the model to data on Italian SMEs from the "Survey on Manufacturing Firms" conducted by Mediocredito-Capitalia covering the period 1995-2003. The model is estimated in steps, following the logic of firms' decisions and outcomes: in the first, R&D intensity is linked to a set of firm and market characteristics. We find that international competition fosters R&D intensity, especially for high-tech firms. Firm size, R&D intensity, along with investment in equipment enhances the likelihood of having both process and product innovation. Both these kinds of innovation have a positive impact on firm's productivity, especially process innovation. Among SMEs, larger and older firms seem to be less productive.
Handle: RePEc:nbr:nberwo:14594
Template-Type: ReDIF-Paper 1.0
Title: Learning the Wealth of Nations
Classification-JEL: O4; O43; O50
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Alexander Monge-Naranjo
Author-Person: pmo730
Author-Name: Giorgio E. Primiceri
Author-Person: ppr18
Note: EFG
Number: 14595
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14595
File-URL: http://www.nber.org/papers/w14595.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Buera & Alexander Monge‐Naranjo & Giorgio E. Primiceri, 2011. "Learning the Wealth of Nations," Econometrica, Econometric Society, vol. 79(1), pages 1-45, 01.
Abstract: We study the evolution of market-oriented policies over time and across countries. We consider a model in which own and neighbors' past experiences influence policy choices, through their effect on policymakers' beliefs. We estimate the model using a large panel of countries. We find that there is a strong geographical component to learning, which is crucial to explain the slow adoption of liberal policies during the postwar period. Our model also predicts that there would be a substantial reversal to state intervention if nowadays the world was hit by a shock of the size of the Great Depression.
Handle: RePEc:nbr:nberwo:14595
Template-Type: ReDIF-Paper 1.0
Title: Opting Out of the Great Inflation: German Monetary Policy After the Break Down of Bretton Woods
Classification-JEL: E31; E32; E41; E52; E58
Author-Name: Andreas Beyer
Author-Person: pbe141
Author-Name: Vitor Gaspar
Author-Name: Christina Gerberding
Author-Name: Otmar Issing
Note: IFM
Number: 14596
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14596
File-URL: http://www.nber.org/papers/w14596.pdf
File-Format: application/pdf
Abstract: During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the Bundesbank provided the role model for the European Central Bank. Hence, we examine an episode of lasting importance in European monetary history. The purpose of this paper is to highlight how the Bundesbank monetary policy strategy contributed to this success. We analyze the strategy as it was conceived, communicated and refined by the Bundesbank itself. We propose a theoretical framework (following Söderström, 2005) where monetary targeting is interpreted, first and foremost, as a commitment device. In our setting, a monetary target helps anchoring inflation and inflation expectations. We derive an interest rate rule and show empirically that it approximates the way the Bundesbank conducted monetary policy over the period 1975-1998. We compare the Bundesbank's monetary policy rule with those of the FED and of the Bank of England. We find that the Bundesbank's policy reaction function was characterized by strong persistence of policy rates as well as a strong response to deviations of inflation from target and to the activity growth gap. In contrast, the response to the level of the output gap was not significant. In our empirical analysis we use real-time data, as available to policy-makers at the time.
Handle: RePEc:nbr:nberwo:14596
Template-Type: ReDIF-Paper 1.0
Title: Predictability and 'Good Deals' in Currency Markets
Classification-JEL: F31; G15
Author-Name: Richard M. Levich
Author-Name: Valerio Poti
Author-Person: ppo218
Note: IFM
Number: 14597
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14597
File-URL: http://www.nber.org/papers/w14597.pdf
File-Format: application/pdf
Publication-Status: published as Levich, Richard M. & Potì, Valerio, 2015. "Predictability and ‘good deals’ in currency markets," International Journal of Forecasting, Elsevier, vol. 31(2), pages 454-472.
Abstract: This paper studies predictability of currency returns over the period 1971-2006. To assess the economic significance of currency predictability, we construct an upper bound on the explanatory power of predictive regressions. The upper bound is motivated by "no good-deal" restrictions that rule out unduly attractive investment opportunities. We find evidence that predictability often exceeds this bound. Excess-predictability is highest in the 1970s and tends to decrease over time, but it is still present in the final part of the sample period. Moreover, periods of high and low predictability tend to alternate. These stylized facts pose a challenge to Fama's (1970) Efficient Market Hypothesis but are consistent with Lo's (2004) Adaptive Market Hypothesis, coupled with slow convergence towards efficient markets. Strategies that attempt to exploit daily excess-predictability are very sensitive to transaction costs but those that exploit monthly predictability remain attractive even after realistic levels of transaction costs are taken into account and are not spanned by either the Fama and French (1993) equity-based factors or the AFX Currency Management Index.
Handle: RePEc:nbr:nberwo:14597
Template-Type: ReDIF-Paper 1.0
Title: Media Coverage of Political Scandals
Classification-JEL: D72; L82
Author-Name: Riccardo Puglisi
Author-Name: James M. Snyder, Jr.
Author-Person: psn39
Note: POL
Number: 14598
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14598
File-URL: http://www.nber.org/papers/w14598.pdf
File-Format: application/pdf
Publication-Status: published as Puglisi R, Snyder JM. Newspaper Coverage of Political Scandals. Journal of Politics. 2011;73(3):931-950.
Abstract: We analyze the coverage of U.S. political scandals by U.S. newspapers during the past decade. Using automatic keyword-based searches we collected data on 35 scandals and approximately 200 newspapers. We find that Democratic-leaning newspapers -- i.e., those with a higher propensity to endorse Democratic candidates in elections -- give relatively more coverage to scandals involving Republican politicians than scandals involving Democratic politicians, while Republican-leaning newspapers tend to do the opposite. This is true even when controlling for the average partisan leanings of readers. In contrast, newspapers appear to cater to the partisan tastes of readers only for local scandals.
Handle: RePEc:nbr:nberwo:14598
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit
Classification-JEL: H53; I32; I38; J13; J18
Author-Name: Gordon Dahl
Author-Person: pda455
Author-Name: Lance Lochner
Author-Person: plo31
Note: CH LS PE
Number: 14599
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14599
File-URL: http://www.nber.org/papers/w14599.pdf
File-Format: application/pdf
Publication-Status: published as Gordon B. Dahl & Lance Lochner, 2012. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," American Economic Review, American Economic Association, vol. 102(5), pages 1927-56, August.
Abstract: Past estimates of the effect of family income on child development have often been plagued by endogeneity and measurement error. In this paper, we use an instrumental variables strategy to estimate the causal effect of income on children's math and reading achievement. Our identification derives from the large, non-linear changes in the Earned Income Tax Credit (EITC) over the last two decades. The largest of these changes increased family income by as much as 20%, or approximately $2,100, between 1993 and 1997. Using a panel of roughly 4,500 children matched to their mothers from National Longitudinal Survey of Youth datasets allows us to address problems associated with unobserved heterogeneity, endogenous transitory income shocks, and measurement error in income. Our baseline estimates imply that a $1,000 increase in income raises combined math and reading test scores by 6% of a standard deviation in the short-run. Test gains are larger for children from disadvantaged families and are robust to a variety of alternative specifications.
Handle: RePEc:nbr:nberwo:14599
Template-Type: ReDIF-Paper 1.0
Title: "Currency Manipulation" and World Trade
Classification-JEL: F02; F13; F31; K33
Author-Name: Robert W. Staiger
Author-Person: pst85
Author-Name: Alan O. Sykes
Note: ITI
Number: 14600
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14600
File-URL: http://www.nber.org/papers/w14600.pdf
File-Format: application/pdf
Publication-Status: published as Staiger, Robert W. & Sykes, Alan O., 2010. "‘Currency manipulation’ and world trade," World Trade Review, Cambridge University Press, vol. 9(04), pages 583-627, October.
Abstract: Central bank intervention in foreign exchange markets may, under some conditions, stimulate exports and retard imports. In the past few years, this issue has moved to center stage because of the foreign exchange policies of China. China has regularly intervened to prevent the RMB from appreciating relative to other currencies, and over the same period has developed large global and bilateral trade surpluses. Numerous public officials and commentators argue that China has engaged in impermissible "currency manipulation," and various proposals for stiff action against China have been advanced. This paper clarifies the theoretical relationship between exchange rate policy and international trade, and addresses the question of what content can be given to the concept of "currency manipulation" as a measure that may impair the commitments made in trade agreements. Our conclusions are at odds with much of what is currently being said by proponents of counter-measures against China. For example, it is often asserted that China's currency policies have real effects that are equivalent to an export subsidy. In fact, however, if prices are flexible the effect of exchange rate intervention parallels that of a uniform import tariff and export subsidy, which will have no real effect on trade, an implication of Lerner's symmetry theorem. With sticky prices, the real effects of exchange rate intervention and the translation of that intervention into trade-policy equivalents depend critically on how traded goods and services are priced. The real effects of China's policies are potentially quite complex, are not readily translated into trade-policy equivalents, and are dependent on the time frame over which they are evaluated (because prices are less "sticky" over a longer time frame).
Handle: RePEc:nbr:nberwo:14600
Template-Type: ReDIF-Paper 1.0
Title: Forecast Evaluation of Small Nested Model Sets
Classification-JEL: C32; C53; E37
Author-Name: Kirstin Hubrich
Author-Person: phu89
Author-Name: Kenneth D. West
Author-Person: pwe16
Note: AP ME TWP
Number: 14601
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14601
File-URL: http://www.nber.org/papers/w14601.pdf
File-Format: application/pdf
Publication-Status: published as Kirstin Hubrich & Kenneth D. West, 2010. "Forecast evaluation of small nested model sets," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(4), pages 574-594.
Abstract: We propose two new procedures for comparing the mean squared prediction error (MSPE) of a benchmark model to the MSPEs of a small set of alternative models that nest the benchmark. Our procedures compare the benchmark to all the alternative models simultaneously rather than sequentially, and do not require reestimation of models as part of a bootstrap procedure. Both procedures adjust MSPE differences in accordance with Clark and West (2007); one procedure then examines the maximum t-statistic, the other computes a chi-squared statistic. Our simulations examine the proposed procedures and two existing procedures that do not adjust the MSPE differences: a chi-squared statistic, and White's (2000) reality check. In these simulations, the two statistics that adjust MSPE differences have most accurate size, and the procedure that looks at the maximum t-statistic has best power. We illustrate our procedures by comparing forecasts of different models for U.S. inflation.
Handle: RePEc:nbr:nberwo:14601
Template-Type: ReDIF-Paper 1.0
Title: Conveying Quality and Value in Emerging Industries: Star Scientists and the Role of Learning in Biotechnology
Classification-JEL: D80; G10; J33
Author-Name: Matthew J. Higgins
Author-Person: phi60
Author-Name: Paula E. Stephan
Author-Person: pst458
Author-Name: Jerry G. Thursby
Author-Person: pth25
Note: LS PR
Number: 14602
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14602
File-URL: http://www.nber.org/papers/w14602.pdf
File-Format: application/pdf
Publication-Status: published as Research Policy 2011 | 40 | 4 | 605-617 Conveying quality and value in emerging industries: Star scientists and the role of signals in biotechnology Matthew J. Higgins Paula E. Stephan Jerry G. Thursby
Abstract: Managers of private entrepreneurial firms face obstacles in raising capital both in placing a value on a firm and conveying value to investors. These problems are exacerbated when the firm is small, has limited assets (except for human capital) and has yet to have a lead product. In such cases metrics are necessary to convey the value of the firm to investors. Here we explore the importance within the biotechnology industry of the non-financial metrics firms used to convey value during two important initial public offerings (IPO) windows (1989 to 1992 and 1996 to 2000). We also examine whether there was a change over time in the importance of various metrics in determining the value of a biotechnology firm. We find that firms with an affiliated Nobel laureate succeeded in raising the value of their firms by more than $30 million compared to firms without a Nobel laureate during the first period, suggesting that a Nobel laureate served as a powerful signal of firm value. Our results also suggest that the biotechnology regime changed and the Nobel Prize lost its luster as a signal of value in the second period. The importance of several other non-financial metrics changed as well. We conclude that these non-financial metrics of value change in relative importance to potential investors and financial markets as learning occurs and as an industry matures.
Handle: RePEc:nbr:nberwo:14602
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Presidentialism
Classification-JEL: H1
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Ragnar Torvik
Author-Person: pto24
Note: POL
Number: 14603
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14603
File-URL: http://www.nber.org/papers/w14603.pdf
File-Format: application/pdf
Publication-Status: published as James A. Robinson & Ragnar Torvik, 2016. "ENDOGENOUS PRESIDENTIALISM," Journal of the European Economic Association, vol 14(4), pages 907-942.
Abstract: We develop a model to understand the incidence of presidential and parliamentary institutions. Our analysis is predicated on two ideas: first, that minorities are relatively powerful in a parliamentary system compared to a presidential system, and second, that presidents have more power with respect to their own coalition than prime ministers do. These assumptions imply that while presidentialism has separation of powers, it does not necessarily have more checks and balances than parliamentarism. We show that presidentialism implies greater rent extraction and lower provision of public goods than parliamentarism. Moreover, political leaders who prefer presidentialism may be supported by their own coalition if they fear losing agenda setting power to another group. We argue that the model is consistent with a great deal of qualitative information about presidentialism in Africa and Latin America.
Handle: RePEc:nbr:nberwo:14603
Template-Type: ReDIF-Paper 1.0
Title: Institutions vs. Policies: A Tale of Two Islands
Classification-JEL: E0; F0; N0; O1
Author-Name: Peter Blair Henry
Author-Person: phe166
Author-Name: Conrad Miller
Note: EFG IFM ITI LE LS ME PE POL
Number: 14604
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14604
File-URL: http://www.nber.org/papers/w14604.pdf
File-Format: application/pdf
Publication-Status: published as Peter Blair Henry & Conrad Miller, 2009. "Institutions versus Policies: A Tale of Two Islands," American Economic Review, American Economic Association, vol. 99(2), pages 261-67, May.
Abstract: Recent work emphasizes the primacy of differences in countries' colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados' GDP per capita grew roughly three times as fast as Jamaica's. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.
Handle: RePEc:nbr:nberwo:14604
Template-Type: ReDIF-Paper 1.0
Title: Trading Frictions and House Price Dynamics
Classification-JEL: D83; E3
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: John Leahy
Author-Person: ple189
Note: EFG ME
Number: 14605
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14605
File-URL: http://www.nber.org/papers/w14605.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Caplin & John Leahy, 2011. "Trading Frictions and House Price Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 283-303, October.
Abstract: We construct a model of trade with matching frictions. The model provides a simple characterization for the joint proces of prices, sales and inventory. We compare the implications of the model to certain properties of housing markets. The model can generate the large price changes and the positive correlation between prices and sales that we see in the data. Unlike the data, prices are negatively autocorrelated and high inventory predicts price appreciation. We investigate several amendments to the model.
Handle: RePEc:nbr:nberwo:14605
Template-Type: ReDIF-Paper 1.0
Title: Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq
Classification-JEL: F51; F52; H4; H43; H56; O12; O53
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: Jacob N. Shapiro
Author-Name: Joseph H. Felter
Note: IFM PE POL PR
Number: 14606
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14606
File-URL: http://www.nber.org/papers/w14606.pdf
File-Format: application/pdf
Publication-Status: published as Eli Berman & Jacob N. Shapiro & Joseph H. Felter, 2011. "Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq," Journal of Political Economy, University of Chicago Press, vol. 119(4), pages 766 - 819.
Abstract: We develop and test an economic theory of insurgency motivated by the informal literature and by recent military doctrine. We model a three-way contest between violent rebels, a government seeking to minimize violence by mixing service provision and coercion, and civilians deciding whether to share information about insurgents. We test the model using panel data from Iraq on violence against Coalition and Iraqi forces, reconstruction spending, and community characteristics (sectarian status, socio-economic grievances, and natural resource endowments). Our results support the theory's predictions: improved service provision reduces insurgent violence, particularly for smaller projects and since the "surge" began in 2007.
Handle: RePEc:nbr:nberwo:14606
Template-Type: ReDIF-Paper 1.0
Title: Estimating Teacher Impacts on Student Achievement: An Experimental Evaluation
Classification-JEL: I21
Author-Name: Thomas J. Kane
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: CH ED LS
Number: 14607
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14607
File-URL: http://www.nber.org/papers/w14607.pdf
File-Format: application/pdf
Abstract: We used a random-assignment experiment in Los Angeles Unified School District to evaluate various non-experimental methods for estimating teacher effects on student test scores. Having estimated teacher effects during a pre-experimental period, we used these estimates to predict student achievement following random assignment of teachers to classrooms. While all of the teacher effect estimates we considered were significant predictors of student achievement under random assignment, those that controlled for prior student test scores yielded unbiased predictions and those that further controlled for mean classroom characteristics yielded the best prediction accuracy. In both the experimental and non-experimental data, we found that teacher effects faded out by roughly 50 percent per year in the two years following teacher assignment.
Handle: RePEc:nbr:nberwo:14607
Template-Type: ReDIF-Paper 1.0
Title: National Board Certification and Teacher Effectiveness: Evidence from a Random Assignment Experiment
Classification-JEL: I21
Author-Name: Steven Cantrell
Author-Name: Jon Fullerton
Author-Name: Thomas J. Kane
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: CH ED LS
Number: 14608
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14608
File-URL: http://www.nber.org/papers/w14608.pdf
File-Format: application/pdf
Abstract: The National Board for Professional Teaching Standards (NBPTS) assesses teaching practice based on videos and essays submitted by teachers. We compared the performance of classrooms of elementary students in Los Angeles randomly assigned to NBPTS applicants and to comparison teachers. We used information on whether each applicant achieved certification, along with information on each applicant's NBPTS scaled score and subscores, to test whether the NBPTS score was related to teacher impacts on student achievement. We found that students randomly assigned to highly-rated applicants performed better than students assigned to comparison teachers, while students assigned to poorly-rated applicants performed worse. Estimates were similar using data on pairs of teachers that were not randomly assigned. Our results suggest a number of changes that would improve the predictive power of the NBPTS process.
Handle: RePEc:nbr:nberwo:14608
Template-Type: ReDIF-Paper 1.0
Title: Informed Trading, Liquidity Provision, and Stock Selection by Mutual Funds
Classification-JEL: G00; G11; G12; G2
Author-Name: Zhi Da
Author-Name: Pengjie Gao
Author-Name: Ravi Jagannathan
Author-Person: pja91
Note: AP
Number: 14609
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14609
File-URL: http://www.nber.org/papers/w14609.pdf
File-Format: application/pdf
Publication-Status: published as Da, Zhi, Re-Jin Guo and Ravi Jagannathan. 2012. CAPM for Estimating the Cost of Equity Capital: Interpreting the Empirical Evidence. Journal of Financial Economics. 103(1): 204-220.
Abstract: We show that a mutual fund's "stock selection skill" computed using the Daniel, Grinblatt, Titman and Wermers (1997) procedure can be decomposed into additional components that include impatient "informed trading" and "liquidity provision," thereby helping us understand how a fund creates value. We validate our method by verifying that liquidity provision is the dominant component of selection skill for Dimensional Fund Advisors U.S. Micro Cap fund, as observed by Keim (1999). Index funds lose on liquidity absorbing trades, since they pay the price impact on trades triggered by index rebalancing, inflows and redemptions. Consistent with the view that a mutual fund manager with superior stock selection ability is more likely to benefit from trading in stocks affected by information events, we find that funds trading such stocks exhibit superior performance that is more likely to persist. Further, such superior performance comes mostly from impatient informed trading. We also find that informed trading is more important for growth-oriented funds while liquidity provision is more important for younger funds with income orientation.
Handle: RePEc:nbr:nberwo:14609
Template-Type: ReDIF-Paper 1.0
Title: An Anatomy of International Trade: Evidence from French Firms
Classification-JEL: F12; F14; F15; F17; L11; L25
Author-Name: Jonathan Eaton
Author-Person: pea5
Author-Name: Samuel Kortum
Author-Person: pko74
Author-Name: Francis Kramarz
Author-Person: pkr29
Note: IO ITI PR
Number: 14610
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14610
File-URL: http://www.nber.org/papers/w14610.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, 09.
Abstract: We examine the sales of French manufacturing firms in 113 destinations, including France itself. Several regularities stand out: (1) the number of French firms selling to a market, relative to French market share, increases systematically with market size; (2) sales distributions are very similar across markets of very different size and extent of French participation; (3) average sales in France rise very systematically with selling to less popular markets and to more markets. We adopt a model of firm heterogeneity and export participation which we estimate to match moments of the French data using the method of simulated moments. The results imply that nearly half the variation across firms that we see in market entry can be attributed to a single dimension of underlying firm heterogeneity, efficiency. Conditional on entry, underlying efficiency accounts for a much smaller variation in sales in any given market. Parameter estimates imply that fixed costs eat up a little more than half of gross profits. We use our results to simulate the effects of a counterfactual decline in bilateral trade barriers on French firms. While total French sales rise by around US$16 billion, sales by the top decile of firms rise by nearly US$23 billion. Every lower decile experiences a drop in sales, due to selling less at home or exiting altogether.
Handle: RePEc:nbr:nberwo:14610
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Capacity on Sales Under Alternative Vertical Contracts
Classification-JEL: L0
Author-Name: Ioannis Ioannou
Author-Name: Julie Holland Mortimer
Author-Person: pmo678
Author-Name: Richard Mortimer
Note: IO
Number: 14611
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14611
File-URL: http://www.nber.org/papers/w14611.pdf
File-Format: application/pdf
Publication-Status: published as Ioannis Ioannou & Julie Holland Mortimer & Richard Mortimer, 2011. "The Effects Of Capacity On Sales Under Alternative Vertical Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 59(1), pages 117-154, 03.
Abstract: Retailer capacity decisions can impact sales for products by affecting, for example, availability and visibility. Using data from the U.S. video rental industry, we report estimates of the effect of capacity on sales. New monitoring technologies facilitated new supply contracts in this industry, which lowered the upfront costs of capacity and required minimum capacity purchases, strongly impacting stocking decisions. Under the traditional supply contract, capacity costs $44 per tape (avg) and the marginal tape produces 10.4 to 18.0 additional rentals. Under the new contract, capacity costs $7 per tape (avg) and the marginal tape produces 0 to 4.9 additional rentals.
Handle: RePEc:nbr:nberwo:14611
Template-Type: ReDIF-Paper 1.0
Title: Deciphering the Liquidity and Credit Crunch 2007-08
Classification-JEL: E4; E5; G2
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Note: AP CF EFG IFM ME
Number: 14612
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14612
File-URL: http://www.nber.org/papers/w14612.pdf
File-Format: application/pdf
Publication-Status: published as Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
Abstract: This paper summarizes and explains the main events of the liquidity and credit crunch in 2007-08. Starting with the trends leading up to the crisis, I explain how these events unfolded and how four different amplification mechanisms magnified losses in the mortgage market into large dislocations and turmoil in financial markets.
Handle: RePEc:nbr:nberwo:14612
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Firm Scope
Classification-JEL: D23; L23
Author-Name: Oliver Hart
Author-Person: pha222
Author-Name: Bengt Holmstrom
Author-Person: pho488
Note: CF LE
Number: 14613
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14613
File-URL: http://www.nber.org/papers/w14613.pdf
File-Format: application/pdf
Publication-Status: published as Oliver Hart & Bengt Holmstrom, 2010. "A Theory of Firm Scope," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 483-513, May.
Abstract: The existing literature on firms, based on incomplete contracts and property rights, emphasizes that the ownership of assets - and thereby firm boundaries - is determined in such a way as to encourage relationship-specific investments by the appropriate parties. It is generally accepted that this approach applies to owner-managed firms better than to large companies. In this paper, we attempt to broaden the scope of the property rights approach by developing a simple model with three key ingredients: (a) decision rights can be transferred ex ante through ownership, (b) managers (and possibly workers) enjoy private benefits that are non-transferable, and (c) owners can divert a firm's profit. In our basic model decisions are ex post non-contractible; in an extension we use the idea that contracts are reference points to relax this assumption. We show that firm boundaries matter. Nonintegrated firms fail to account for the external effects that their decisions have on other firms. An integrated firm can internalize such externalities, but it does not put enough weight on the private benefits of managers and workers. We explore this tradeoff in a model that focuses on the difficulties companies face in cooperating through the market if the benefits from cooperation are unevenly divided; therefore, they may sometimes end up merging. We show that the assumption that contracts are reference points introduces a friction that permits an analysis of delegation.
Handle: RePEc:nbr:nberwo:14613
Template-Type: ReDIF-Paper 1.0
Title: Risk Bearing, Implicit Financial Services and Specialization in the Financial Industry
Classification-JEL: E01; E44; G21; G32
Author-Name: J. Christina Wang
Author-Name: Susanto Basu
Author-Person: pba274
Note: PR
Number: 14614
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14614
File-URL: http://www.nber.org/papers/w14614.pdf
File-Format: application/pdf
Abstract: This paper makes three points regarding the proper measurement of the output of financial intermediaries. Two of them concern the measurement of nominal financial output, especially banking output. First, we show that, to impute the nominal value of implicitly priced financial output, it is necessary to adjust each reference rate of interest (also called "the user cost of funds") for the risk inherent in that corresponding financial transaction. Otherwise, nominal financial output will be overstated, and the bias can be large (about 25 percent). Second, we argue that, according to finance theory, the required risk correction can be implemented practically at the level of industries (e.g., the banking sector as a whole). The third point concerns the construction of a financial services price index, and thus applies to the measurement of real output. We argue that the reference rates or the related rate spreads, which are used to impute the nominal output of financial institutions, are not the right implicit price deflators for deriving the real output of financial institutions
Handle: RePEc:nbr:nberwo:14614
Template-Type: ReDIF-Paper 1.0
Title: The Value of Risk: Measuring the Service Output of U.S. Commercial Banks
Classification-JEL: E01; E44; G21; G32
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Robert Inklaar
Author-Person: pin7
Author-Name: J. Christina Wang
Note: PR
Number: 14615
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14615
File-URL: http://www.nber.org/papers/w14615.pdf
File-Format: application/pdf
Publication-Status: published as Susanto Basu & Robert Inklaar & J. Christina Wang, 2011. "The Value Of Risk: Measuring The Service Output Of U.S. Commercial Banks," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 226-245, 01.
Abstract: Rather than charging direct fees, banks often charge implicitly for their services via interest spreads. As a result, much of bank output has to be estimated indirectly. In contrast to current statistical practice, dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output. We apply these models and find that between 1997 and 2007, in the U.S. National Accounts, on average, bank output is overestimated by 21 percent and GDP is overestimated by 0.3 percent. Moreover, compared with current methods, our new estimates imply more plausible estimates of the share of capital in income and the return on fixed capital.
Handle: RePEc:nbr:nberwo:14615
Template-Type: ReDIF-Paper 1.0
Title: A General-Equilibrium Asset-Pricing Approach to the Measurement of Nominal and Real Bank Output
Classification-JEL: E01; E44; G21; G32
Author-Name: J. Christina Wang
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: John G. Fernald
Author-Person: pfe43
Note: ME PR
Number: 14616
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14616
File-URL: http://www.nber.org/papers/w14616.pdf
File-Format: application/pdf
Publication-Status: published as A General-Equilibrium Asset-Pricing Approach to the Measurement of Nominal and Real Bank Output, J. Christina Wang, Susanto Basu, John G. Fernald. in Price Index Concepts and Measurement, Diewert, Greenlees, and Hulten. 2009
Abstract: This paper addresses the proper measurement of financial service output that is not priced explicitly. It shows how to impute nominal service output from financial intermediaries' interest income, and how to construct price indices for those financial services. We model financial intermediaries as providers of financial services which resolve asymmetric information between borrowers and lenders. We embed these intermediaries in a dynamic, stochastic, general-equilibrium model where assets are priced competitively according to their systematic risk, as in the standard consumption-based capital-asset-pricing model. In this environment, we show that it is critical to take risk into account in order to measure financial output accurately. We also show that even using a risk-adjusted reference rate does not solve all the problems associated with measuring nominal financial service output. Our model allows us to address important outstanding questions in output and productivity measurement for financial firms, such as: (1) What are the correct "reference rates" to use in calculating bank output? In particular, should they take account of risk? (2) If reference rates need to be risk-adjusted, should they be ex ante or ex post rates of return? (3) What is the right price deflator for the output of financial firms? Is it just the general price index? (4) When--if ever--should we count capital gains of financial firms as part of financial service output?
Handle: RePEc:nbr:nberwo:14616
Template-Type: ReDIF-Paper 1.0
Title: Unemployment Dynamics in the OECD
Classification-JEL: E24; J6
Author-Name: Michael Elsby
Author-Person: pel126
Author-Name: Bart Hobijn
Author-Person: pho54
Author-Name: Aysegul Sahin
Author-Person: psa123
Note: EFG LS ME
Number: 14617
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14617
File-URL: http://www.nber.org/papers/w14617.pdf
File-Format: application/pdf
Publication-Status: published as Michael W. L. Elsby & Bart Hobijn & AyÅegül Åahin, 2013. "Unemployment Dynamics in the OECD," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 530-548, May.
Abstract: We provide a set of comparable estimates for the rates of inflow to and outflow from unemployment for fourteen OECD economies using publicly available data. We then devise a method to decompose changes in unemployment into contributions accounted for by changes in inflow and outflow rates for cases where unemployment deviates from its flow steady state, as it does in many countries. Our decomposition reveals that fluctuations in both inflow and outflow rates contribute substantially to unemployment variation within countries. For Anglo-Saxon economies we find approximately a 20:80 inflow/outflow split to unemployment variation, while for Continental European countries, we observe much closer to a 50:50 split. Using the estimated flow rates we compute gross worker flows into and out of unemployment. In all economies we observe that increases in inflows lead increases in unemployment, whereas outflows lag a ramp up in unemployment.
Handle: RePEc:nbr:nberwo:14617
Template-Type: ReDIF-Paper 1.0
Title: Ex Ante Efficiency in School Choice Mechanisms: An Experimental Investigation
Classification-JEL: C78; C9; I2
Author-Name: Clayton Featherstone
Author-Name: Muriel Niederle
Author-Person: pni95
Note: ED LS
Number: 14618
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14618
File-URL: http://www.nber.org/papers/w14618.pdf
File-Format: application/pdf
Abstract: Criteria for evaluating school choice mechanisms are first, whether truth-telling is sometimes punished and second, how efficient the match is. With common knowledge preferences, Deferred Acceptance (DA) dominates the Boston mechanism by the first criterion and is ambiguously ranked by the second. Our laboratory experiments confirm this. A new ex ante perspective, where preferences are private information, introduces new efficiency costs borne by strategy-proof mechanisms, like DA. In a symmetric environment, truth-telling can be an equilibrium under Boston, and Boston can first-order stochastically dominate DA in terms of efficiency, both in theory and in the laboratory.
Handle: RePEc:nbr:nberwo:14618
Template-Type: ReDIF-Paper 1.0
Title: Hospitals As Hotels: The Role of Patient Amenities in Hospital Demand
Classification-JEL: I11
Author-Name: Dana Goldman
Author-Person: pgo681
Author-Name: John A. Romley
Note: EH
Number: 14619
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14619
File-URL: http://www.nber.org/papers/w14619.pdf
File-Format: application/pdf
Abstract: Amenities such as good food, attentive staff, and pleasant surroundings may play an important role in hospital demand. We use a marketing survey to measure amenities at hospitals in greater Los Angeles and analyze the choice behavior of Medicare pneumonia patients in this market. We find that the mean valuation of amenities is positive and substantial. From the patient perspective, hospital quality therefore embodies amenities as well as clinical quality. We also find that a one-standard-deviation increase in amenities raises a hospital's demand by 38.4% on average, whereas demand is substantially less responsive to clinical quality as measured by pneumonia mortality. These findings imply that hospitals may have an incentive to compete in amenities, with potentially important implications for welfare.
Handle: RePEc:nbr:nberwo:14619
Template-Type: ReDIF-Paper 1.0
Title: Information-Constrained State-Dependent Pricing
Classification-JEL: E31
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG ME
Number: 14620
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14620
File-URL: http://www.nber.org/papers/w14620.pdf
File-Format: application/pdf
Publication-Status: published as Information-constrained state-dependent pricing Michael Woodford Year of Publication: 2009 Authors: Woodford, Michael Published in: Journal of monetary economics.- Amsterdam : Elsevier, ISSN 0304-3932, ZDB-ID 1911557. - Vol. 56.2009, 1/d15/m10, p. 100-124
Abstract: I present a generalization of the standard (full-information) model of state- dependent pricing in which decisions about when to review a firm's existing price must be made on the basis of imprecise awareness of current market conditions. The imperfect information is endogenized using a variant of the theory of "rational inattention" proposed by Sims (1998, 2003, 2006). This results in a one-parameter family of models, indexed by the cost of information, which nests both the standard state-dependent pricing model and the Calvo model of price adjustment as limiting cases (corresponding to a zero information cost and an unboundedly large information cost respectively). For intermediate levels of the information cost, the model is equivalent to a "generalized Ss model" with a continuous \adjustment hazard" of the kind proposed by Caballero and Engel (1993a, 1993b), but provides an economic motivation for the hazard function and very specific predictions about its form. For high enough levels of the information cost, the Calvo model of price-setting is found to be a reasonable approximation to the exact equilibrium dynamics, except in the case of (infrequent) large shocks. When the model is calibrated to match the frequency and size distribution of price changes observed in microeconomic data sets, prices are found to be much less flexible than in a full-information state-dependent pricing model, and only about 20 percent more flexible than under a Calvo model with the same average frequency of price adjustment.
Handle: RePEc:nbr:nberwo:14620
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy, Trend Inflation and the Great Moderation: An Alternative Interpretation
Classification-JEL: C22; E3; E43; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG ME
Number: 14621
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14621
File-URL: http://www.nber.org/papers/w14621.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko, 2011. "Monetary Policy, Trend Inflation, and the Great Moderation: An Alternative Interpretation," American Economic Review, American Economic Association, vol. 101(1), pages 341-70, February.
Abstract: With positive trend inflation, the Taylor principle is not enough to guarantee a determinate equilibrium. We provide new theoretical results on restoring determinacy in New Keynesian models with positive trend inflation and combine these with new empirical findings on the Federal Reserve's reaction function before and after the Volcker disinflation to find that 1) while the Fed likely satisfied the Taylor principle in the pre-Volcker era, the US economy was still subject to self-fulfilling fluctuations in the 1970s, 2) the US economy moved from indeterminacy to determinacy during the Volcker disinflation, and 3) the switch from indeterminacy to determinacy was due to the changes in the Fed's response to macroeconomic variables and the decline in trend inflation during the Volcker disinflation.
Handle: RePEc:nbr:nberwo:14621
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Welfare Economics
Classification-JEL: D01; D60; H40
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Note: PE
Number: 14622
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14622
File-URL: http://www.nber.org/papers/w14622.pdf
File-Format: application/pdf
Publication-Status: published as B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
Publication-Status: published as B. Douglas Bernheim, 2010. "Behavioral welfare economics," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(2), pages 123-151, June.
Publication-Status: published as B. Douglas Bernheim, 2010. "Behavioral welfare economics," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(1), pages 1-22, March.
Abstract: This paper discusses several competing proposals for general normative frameworks that would encompass non-standard models of choice. Most existing proposals equate welfare with well-being. Some assume that well-being flows from the achievement of well-defined objectives, and that those objectives also guide choices; the trick is to formulate a framework in which less-than-completely coherent choice patterns reveal the unobserved objectives. Others are predicated on the contention that well-being, and hence welfare, is directly measurable. Both of those approaches encounter serious conceptual difficulties. An alternative approach, developed by Bernheim and Rangel [2009], defines welfare directly in terms of choice. It entails a generalized welfare criterion that respects choice directly, without requiring any rationalization involving potentially unverifiable assumptions concerning underlying objectives and their relationships to choice. Because useful behavioral theories generally envision a substantial degree of underlying coherence in behavior, that criterion leads to a rich and tractable normative framework.
Handle: RePEc:nbr:nberwo:14622
Template-Type: ReDIF-Paper 1.0
Title: Private Equity and Long-Run Investment: The Case of Innovation
Classification-JEL: G24; G32; O31
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Morten Sørensen
Author-Name: Per Strömberg
Author-Person: pst18
Note: CF PR
Number: 14623
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14623
File-URL: http://www.nber.org/papers/w14623.pdf
File-Format: application/pdf
Publication-Status: published as Josh Lerner & Morten Sorensen & Per Strömberg, 2011. "Private Equity and Long‐Run Investment: The Case of Innovation," Journal of Finance, American Finance Association, vol. 66(2), pages 445-477, 04.
Abstract: A long-standing controversy is whether LBOs relieve managers from short-term pressures from public shareholders, or whether LBO funds themselves are driven by short-term profit motives and sacrifice long-term growth to boost short-term performance. We investigate 495 transactions with a focus on one form of long-term activities, namely investments in innovation as measured by patenting activity. We find no evidence that LBOs are associated with a decrease in these activities. Relying on standard measures of patent quality, we find that patents granted to firms involved in private equity transactions are more cited (a proxy for economic importance), show no significant shifts in the fundamental nature of the research, and are more concentrated in the most important and prominent areas of companies' innovative portfolios.
Handle: RePEc:nbr:nberwo:14623
Template-Type: ReDIF-Paper 1.0
Title: Do Child Tax Benefits Affect the Wellbeing of Children? Evidence from Canadian Child Benefit Expansions
Classification-JEL: I1; I2
Author-Name: Kevin Milligan
Author-Person: pmi14
Author-Name: Mark Stabile
Author-Person: pst179
Note: CH EH
Number: 14624
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14624
File-URL: http://www.nber.org/papers/w14624.pdf
File-Format: application/pdf
Publication-Status: published as Kevin Milligan & Mark Stabile, 2011. "Do Child Tax Benefits Affect the Well-Being of Children? Evidence from Canadian Child Benefit Expansions," American Economic Journal: Economic Policy, American Economic Association, vol. 3(3), pages 175-205, August.
Abstract: A vast literature has examined the impact of family income on the health and development outcomes of children. One channel through which increased income may operate is an improvement in a family's ability to provide food, shelter, clothing, books, and other expenditure-related inputs to a child's development. In addition to this channel, many scholars have investigated the relationship between income and the psychological wellbeing of the family. By reducing stress and conflict, more income helps to foster an environment more conducive to healthy child development. In this paper, we exploit changes in child benefits in Canada to study these questions. Importantly, our approach allows us to make stronger causal inferences than has been possible with the existing, mostly correlational, evidence. Using variation in child benefits across province, time, and family type, we study outcomes spanning test scores, mental health, physical health, and deprivation measures. The findings suggest that child benefit programs in Canada had significant positive effects on test scores, as has been featured in the existing literature. However, we also find that several measures of both child and maternal mental health and well-being show marked improvement with higher child benefits. We find strong and interesting differences in the effects of benefits by sex of the child: benefits have stronger effects on educational outcomes and physical health for boys, and on mental health outcomes for girls. Our findings also provide some support for the hypothesis that income transfers operate through measures of family emotional well-being.
Handle: RePEc:nbr:nberwo:14624
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Model of Subprime Mortgage Default From 2000 to 2007
Classification-JEL: G01; G18; G2; G33; R51
Author-Name: Patrick Bajari
Author-Name: Chenghuan Sean Chu
Author-Name: Minjung Park
Author-Person: ppa426
Note: IO
Number: 14625
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14625
File-URL: http://www.nber.org/papers/w14625.pdf
File-Format: application/pdf
Abstract: The turmoil that started with increased defaults in the subprime mortgage market has generated instability in the financial system around the world. To better understand the root causes of this financial instability, we quantify the relative importance of various drivers behind subprime borrowers' decision to default. In our econometric model, we allow borrowers to default either because doing so increases their lifetime wealth or because of short-term budget constraints, treating the decision as the outcome of a bivariate probit model with partial observability. We estimate our model using detailed loan-level data from LoanPerformance and the Case-Shiller home price index. According to our results, one main driver of default is the nationwide decrease in home prices. The decline in home prices caused many borrowers' outstanding mortgage liability to exceed their home value, and for these borrowers default can increase their wealth. Another important driver is deteriorating loan quality: The increase of borrowers with poor credit and high payment to income ratios elevates default rates in the subprime market. We discuss policy implications of our results. Our findings point to flaws in the securitization process that led to the current wave of defaults. Also, we use our model to evaluate alternative policies aimed at reducing the rate of default.
Handle: RePEc:nbr:nberwo:14625
Template-Type: ReDIF-Paper 1.0
Title: Global Production and Trade in the Knowledge Economy
Classification-JEL: F1; F15; F23
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: Stephen R. Yeaple
Author-Person: pye37
Note: ITI PR
Number: 14626
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14626
File-URL: http://www.nber.org/papers/w14626.pdf
File-Format: application/pdf
Abstract: This paper presents and tests a new model of multinational firms to explain a rich array of multinational behavior. In contrast to most approaches, here the multinational faces costs to transferring its know-how that are increasing in technological complexity. Costly technology transfer gives rise to increasing marginal costs of serving foreign markets, which explains why multinational firms are often much more successful in their home market compared to foreign markets. The model has several key predictions. First, as transport costs between multinational parent and affiliate increase, firms with complex production technologies find it relatively difficult to substitute local production for imports from the parent, because complex technologies are relatively costly to transfer. Second, the activity of affiliates with complex technologies declines relatively strongly as transport costs from the home market increase, both at the intensive and the extensive margin. We also show that as transport costs from the home market increase, affiliates concentrate their imports from the parent on intermediates that are technologically more complex. We test these hypotheses by employing information on the activities of individual multinational firms, on the nature of intra-firm trade at the product level, and on the skills required for occupations with different complexity. The empirical analysis finds strong evidence in support of the model by confirming all four hypotheses. The analysis shows that accounting for costly technology transfer within multinational firms is important for explaining the structure of trade and multinational production.
Handle: RePEc:nbr:nberwo:14626
Template-Type: ReDIF-Paper 1.0
Title: New Evidence on the Formation of Trade Policy Preferences
Classification-JEL: D72; D83; F13; F16
Author-Name: Bruce Blonigen
Author-Person: pbl165
Note: ITI
Number: 14627
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14627
File-URL: http://www.nber.org/papers/w14627.pdf
File-Format: application/pdf
Abstract: This paper revisits the issue of people's preferences for international trade protection examining survey data from the American National Election Studies. I first show that both an individual's skills and the international trade characteristics of their employment industry affects their trade policy preferences, in contrast to previous analysis using these data. Second, I document that many people do not feel informed enough to state a preference on trade protection, which is inconsistent with assumptions of standard political economy models. I examine the factors that correlate with being uninformed, and show that inferences from actual trade policy outcomes can be incorrect if one does not account for this uninformed group. Finally, I examine and find that individuals' retirement decisions have systematic effects on both their choice to be informed and their trade policy preferences. This highlights that there are significant life-cycle implications to trade policy preferences.
Handle: RePEc:nbr:nberwo:14627
Template-Type: ReDIF-Paper 1.0
Title: A Political Economy Theory of Partial Decentralization
Classification-JEL: D72; H11; H7; H77
Author-Name: John William Hatfield
Author-Name: Gerard Padró i Miquel
Note: PE POL
Number: 14628
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14628
File-URL: http://www.nber.org/papers/w14628.pdf
File-Format: application/pdf
Publication-Status: published as A POLITICAL ECONOMY THEORY OF PARTIAL DECENTRALIZATION John William Hatfield1, Gerard Padró i Miquel2 Article first published online: 5 MAR 2012 DOI: 10.1111/j.1542-4774.2012.01066.x © 2012 by the European Economic Association Issue Journal of the European Economic Association Journal of the European Economic Association Volume 10, Issue 3, pages 605–633, June 2012
Abstract: We revisit the classic problem of tax competition in the context of federal nations, and derive a positive theory of partial decentralization. A capital poor median voter wants to use capital taxes to provide public goods. This results in redistributive public good provision. As a consequence, when all public goods are provided by the central government, capital taxes and public good provision are high. The expectation of high capital taxes, however, results in a small capital stock which lowers returns to redistribution. The median voter would therefore like to commit to a lower level of capital taxes. Decentralization provides such a commitment: local governments avoid using capital taxes due to the pressure of tax competition. We therefore obtain that the median voter favors a partial degree of decentralization. The equilibrium degree of decentralization is non-monotonic in inequality, increasing in the redistributive efficiency of public good provision, and decreasing in capital productivity. When public goods are heterogeneous in their capacity to transfer funds, all voters agree that goods with high redistributive capacity should be decentralized.
Handle: RePEc:nbr:nberwo:14628
Template-Type: ReDIF-Paper 1.0
Title: Incomplete-Market Equilibria Solved Recursively on an Event Tree
Classification-JEL: C63; C68; D52; D58; D91; G11; G12
Author-Name: Bernard Dumas
Author-Person: pdu519
Author-Name: Andrew Lyasoff
Note: AP EFG IFM TWP
Number: 14629
Creation-Date: 2008-12
Order-URL: http://www.nber.org/papers/w14629
File-URL: http://www.nber.org/papers/w14629.pdf
File-Format: application/pdf
Publication-Status: published as Incomplete-Market Equilibria Solved Recursively on an Event Tree BERNARD DUMAS, ANDREW LYASOFF† Article first published online: 12 SEP 2012 DOI: 10.1111/j.1540-6261.2012.01775.x © 2012 The American Finance Association Issue The Journal of Finance The Journal of Finance Volume 67, Issue 5, pages 1897–1941, October 2012
Abstract: We develop a method that allows one to compute incomplete-market equilibria routinely for Markovian equilibria (when they exist). The main difficulty to be overcome arises from the set of state variables. There are, of course, exogenous state variables driving the economy but, in an incomplete market, there are also endogenous state variables, which introduce path dependence. We write on an event tree the system of all first-order conditions of all times and states and solve recursively for state prices, which are dual variables. We illustrate this "dual" method and show its many practical advantages by means of several examples.
Handle: RePEc:nbr:nberwo:14629